24 hours after the FOMC decision: US dollar starts to find a foothold

    Comment

    Shutterstock photo

    Light dollar bounce is hardly inspiring but it's a start

    A December Fed hike sounds like something close to a done deal but worries about the longer term have pushed bond yields lower and that's keeping the US dollar under pressure.

    The questions is: For how long?

    The US dollar is in the midst of a modest bounce at the moment. EUR/USD is at the lowest since Asia, down to 1.1217 from a high of 1.1257. The commodity currencies are also off the best levels of the day but have a long way to go to recoup the losses over the past 24 hours.

    I'm skeptical that the US dollar will stay under pressure for more than a couple days. Rates are likely going up and no matter who wins the election is going to stimulate the economy with spending.

    Looking at the charts, there are waning signs of momentum, like USD/CAD which has only taken a small bite out of the two week rally, despite a +5% rally in oil in the past two days.

    If the dollar can start to get some momentum on Friday and Monday, look for the pace to quickly pickup. But it might take a few positive data releases before it happens. Markit manufacturing is due on Friday with new home sales Monday.

    The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



    This article appears in: Investing , Forex


    More from ForexLive

    Subscribe






    ForexLive
    Contributor:

    ForexLive

    Follow on: