Dollar weakens in the global economy as market absorbs the intense heat

There has been a strong rally in the U.S dollar in the last two months. Most of the professional investors were cautiously waiting for the FED rate hike to get a clear overview about the fundamental of the U.S economy. In the last FOMC meeting minute, the FED has hike their interest rate and it made the U.S dollar extremely stronger against its all major rivals. Moreover on 8th November on the event of the presidential election, the dollar gained its first ground in the global market. This has created intensive volatility in the fx option industry and many traders have made a huge amount of money by trading the U.S dollar on the event of that presidential election. After Mr. Trump become the newly elected president and stated he would increase the fiscal funding and cut down the taxes of the consumer. Such an optimistic statement created extreme positive sentiment in the U.S consumer and pushed the dollar higher in the global economy. To be precise the last two-month performance of the U.S economy was significantly strong in the global industry. However, in the last trading session, the dollar slipped lower against its all major rivals in the industry from the 14 years high. The U.S dollar index which measures the value of the U.S dollar against the six major currencies in the world was also down by 0.3 % in the last trading session. Most of the traders are thinking that the market has done its job for the year 2016 and there will be no intense heat from the green bucks in this whole year. This whole year was extremely packed with heavy impact news releases and most of the major news has been settled down in the market and investors are cautiously waiting to trade the next year with a fresh trading sentiment.

The Green bucks have suddenly ceased its bullish move in the market after hitting the 14 years high in the market. The year 2017 is going to play an important role for the green bucks as Mr. Donald Trump stated that fiscal spending will be increased in the next month. Now the consumer’s sentiment will gradually turn into negative if the U.S government fails to implement these steps at the early period of the next year. Profession fx options traders are now cautiously trading the forex market since they know that the market will exhibit ranging move for the remaining days of the year 2016.However in the eyes of trained professional low volatility is a sign of danger in the market since the market tends to create huge spikes during the low volatility period. The green bucks have gained its strongest strength in the market after rate hike and it’s now at a peak after hitting the high at 2003.The euro suffered an extensive loss in the market as the FED clearly indicated that they will need three rate hike in the next year. But three consecutive rate will be extremely difficult for the FED since they need to make sure that every single sector of their economy is flourished with positive sentiment. According to the leading economist in the U.S such three rate hike plan might be extremely difficult for the FED as they will be closely observing the ongoing economic performance. The professional investors are clearly sensing that the strength of the dollar will be weakened in the near term future since a slight negative news release will push the dollar lower significantly in the market. Moreover, the Central bank will also create pressure to the FED to readjust the inflation rate and to do so the FED must ensure at least two rate hike before the month September 2017.

In the last Friday, the dollar suddenly slipped against its all major rivals in the financial industry. The professional fx options traders are now cautiously waiting for the next move of the U.S government since it will dramatically affect the U.S consumer sentiment. The U.S dollar index hit a high of 103.56 level in the last week and after hitting that high it sharply dropped in the market and fell towards the 102.88 level. Most of the expert traders are considering this fact as the profit taking a drop by the leading organization in the global industry. According to leading currency strategist Dominic Bunning of HSBC, the market is now ready to retrace back to a great extent as the dollar is most likely to get weaken in the next year. Moreover, many investors are saying that the Trump statement is just a story and U.S government will not take such steps in the near term future. Such strong belief in the retail trading community also created a potential threat to the bulls of U.S dollar. The bank of Japan organized a monetary policy meeting and in that press conference, the green bucks lost its strength in the global market to a great extent. To be precise the overall condition suggests that market has completed its reaction to fresh buying pressure created by the good economic performance of the USA and its ready rebound now. Such an intensive sentiment in the market has also created strong bullish sentiment in the mind of gold investors and they are thinking that the market will strongly rally in the next weeks since the FED will be again struggling with interest rate hike decision. The experts are saying that there will be a repetition of the year 2016 and in the next year also.

 

Leave a Reply

Your email address will not be published.