United States Dollar Fundamental Analysis(including USDX)

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US dollar rebounded against six other global currencies since the US session on Tuesday. Strengthening position of Greenback continued in Asian session trading on Wednesday, especially since the market anticipates second quarter GDP data revised today.

 

Currently, US dollar index is trading at 92.47 growing up 0.24%. The greenback turned stronger since US session overnight as geopolitical sentiments linked North Korea missile launches across the sky over Japan's Hokkaido Island have subsided. The market is re-focused on global economic conditions, no longer a factor outside the economy.

 

Market participants are looking at second-quarter US GDP revised data due later in the day. In addition, private-sector ADP employment data will be a determinant of the US dollar movement today.

 

Analysts predict second-quarter US GDP was revised higher to 2.7 percent from the preliminary estimate of GDP at 2.6 percent. Meanwhile, the ADP employment uptake data is predicted to add 185 thousand working positions.

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The US Personal Spending in July grew at a slower pace than expected, the Commerce Department reported Thursday (31/8) early in New York session. In addition, yearly inflation has risen at the slowest pace since late 2015, could lower expectations of a Fed rate hike later in the year.

 

The Commerce Department reported the US Personal Spending rose 0.3 percent last month (expectations rose 0.4 percent), better than the June period that recorded a 0.2 percent rise. Although below expectations, the Personal Spending trend of Uncle Sam's country continues to show growth that is believed to support the third quarter of 2017.

 

As the result of that, US Dollar Index, which measures the strength of the greenback against trading in six major currencies, climbed at 92.92 extending its recovery from a fresh 2.5-year low of 91.55 hit on Tuesday. The dollar also gained against Yen, reaching a two-week peak at 110.60.

 

Separately also released PCE Inflation data grew 0.1 percent (excluding food and energy) in July, in line with earlier expectations and a 0.1 percent rise in June. Core PCE that became the Fed's "Favorite" Inflation indicator recorded growth in the same margin for three consecutive months.

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Inflation is slightly down to away from the target so the Federal Reserve should be careful of doing Advanced Rate Hike until it believes Inflationary pressures will rise even higher, according to a statement from one of Fed's top officials on Tuesday morning local time.

 

As one of the most highly regarded policy makers in the Fed's ranks, Lael Brainard said that the Central Bank must ensure price push (Inflation) above the 2 percent target in a calmer manner.

 

Brainard dovish statement that emerged because the release of Inflation in recent months has not shown a positive trend. Keep in mind that, the Fed has raised the benchmark interest rate twice throughout 2017 and is predicted to do a third Rate Hike later in the year.

 

But unfortunately, after seeing inflation that does not improve to make investors feel skeptical until the probability of Fed rate increase in December only 30 percent. Lael Brainard also alludes to Harvey Storm which he thinks has generated economic uncertainty and is likely to have a real impact on the economy in the third quarter.

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The number of Americans who filed claims for job losses jumped over the past week to touch record highs since April 2015. Most of the Jobless Claims surge came from the Harvey-stricken Texas state some time ago, but the US labor market trend remains consistent on a positive track.

 

According to data published by the Labor Department on Thursday (7/9) showed unemployment claims jumped to 298,000 over the last week for calculations until September 2nd. Unadjusted claims for Texas posted a jump of 51.637 which accounted for 95.6 percent of the increase in Jobless Claims last week. 

 

This happens because Harvey storms that hit Texas make many people find themselves temporarily have to be unemployed. Data Jobless Claims US last week is quite disappointing it then causes the Greenback move weakened against the various major currency. At this hour of evening GBP / USD slightly corrected to be at 1.3080.

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US dollar is still languishing in Friday's trading session this afternoon, due to risk aversion that has not died down, US Employment data are deteriorating due to Harvey storms, as well as Irma storms that hit the Florida region. In addition, the Fed officials' comments on inflation weakened, refining the burden borne by the US Dollar, making it difficult to rise.

 

In addition, early this morning, New York Fed President William Dudley said that the US central bank should continue the rate hike gradually. According to him, the current slowing inflation can still rebound. Nevertheless, the market continues to judge that Dudley's statement does not reflect on his statements in previous events.

 

USD/JPY is still in a steep movement approaching the lowest level at 107,700 since November 2014. In addition, USD/CHF is sliding towards 0.9448. While, EUR/USD is also still sitting at a high level following the ECB's monetary policy yesterday, which despite no change for this month, but provides guidance on the continuation of the QE program in October ahead.

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The dollar was seen higher since the start of the week and resumed in Tuesday's trading session as Investors sold their Sell positions against the greenback, following a rise in Treasury yields and ahead of the release of Inflation data which is the focus of the next market.

 

US Inflation data is a big risk for the market, given the current bearish position of US Dollar. USD will potentially soar when later on Inflation rises above forecasts. The dollar was the third most heavily traded in the global market since the first week of September, according to a survey by Merrill Lynch, Bank of America. The survey results are considered accurate because the Greenback is experiencing a pretty downward trend throughout this month.

 

The position against US Dollar by Investors has swelled to record levels in recent months. This is triggered by weak US Fundamentals data release and changes in prospects for Fed rate hikes that are not possible in the near future (September).

 

The Dollar Index (DXY), which measures the strength against six major currencies, is at 92.02 or up 0.16 percent. The strengthening of the Greenback is reflected in the movement of the EUR / USD pair which is at 1.1932; USD / CHF is at 0.9615 and USD / JPY is at 109.97. The greenback was only weaker against Sterling after the release of UK CPI data skyrocketed.

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Entering the end of Asian session on Friday this afternoon, US Dollar increasingly showed no indifference to North Korean behavior this morning. The US currency strengthened against most of the currencies and erased its net loss reached early in the trading session.

 

USD / CHF is flat at 0.9627. Other safe-haven assets, namely gold, also showed no bullish extension with trading in the range around 1,326.71. Nevertheless, the market did not panic because it had predicted North Korea missile launch this impact will not last long in the market.

 

Many analysts say that market expectations will be the short-lived impact of North Korean missiles due to sanctions from the UN some time ago. North Korea is unlikely to cause further deterioration of the yen, given that US CPI data yesterday was convincing enough to hike US interest rates again.

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US home sales surprisingly fell during August, according to data published by the Commerce Department on Tuesday, indicating that the housing market is slowing. New Home Sales data released tonight showed a 3.4 percent decline in August sales to 560,000 home units, contrary to expectations of economists who previously predicted to rise to 585,000 from 580,000 sales in the previous period.

 

The related department said that Hurricane Harvey and Irma crashing into the Texas region had a negative impact on home sales figures which posted a decline of 1.2% YoY up to last month.

 

In a separate report also released data of US Consumer Confidence in September by The Conference Board that recorded a slight decline compared to the period August. Consumer Confidence this month is at level 119.8 or below 120.4 last month.

 

The greenback was observed higher versus major currencies such as Euro, Sterling and Yen. Investors are waiting for Fed chairman Janet Yellen's speech on monetary policy at the annual meeting of the National Association for Business Economics in Cleveland.

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The bullish US dollar looked on a breather, taking a breath after its week-long rally against major currencies. Except for Yen, US Dollar provides opportunities for a number of other currencies to gain gains in Friday's trading session this afternoon, as investors are mulling over Trump's reform plans and the Fed's monetary policy outlook.

 

In addition, the reportedly diverse US economic data also contributed to the movement of the Dollar. US GDP was better than expected, while Weekly Jobless Claims rose more than expected. The second quarter US GDP finals were revised up to 3.1 percent, higher than the 3.0 percent rise in Second Release GDP and the economists' estimates that the GDP Final would grow by 3 percent.

 

EUR / USD is steady at 1.7793 after it rose from 1.1717 yesterday afternoon, which also became the lowest level in a month's time. The GBP / USD seems to slip 0.1 percent to 1.3425 after gaining 0.4 percent in the previous trading session. On the other hand, USD / JPY is trading at 112.619.

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The US dollar touched a fresh seven-week high against major currencies in Friday's trading session this afternoon. Its support is the expectation of US tax reform and the wait for results from US Employment data (NFP) to be used as a catalyst. Coupled with a hawkish statement from Kansas City Fed President, Esther George.

 

In addition, the US dollar also picked up additional support from Core Capital Goods Order data for August that showed better results than ever before. This is a sign that US corporate budgets can help balance the shaky economy of Harvey and Irma storms some time ago.

 

Against Yen, the US dollar rose around 0.1 % towards 112.89 yen, below last week's high at 113.26. USD / JPY is trading at 112.991. Meanwhile, EUR / USD continues to decline and trade at 1.1689 , has been lower than the 1.1695 figure reached on Tuesday.

 

The market's short-term focus today is NFP for September that is expected to slow down. After two storms (Harvey and Irma), expectations are now very low, so if it gets above 100,000 it will be surprisingly good. According to a Reuters survey of economists, US Non Farm Payrolls data will only increase by 90,000 in September from a 156,000 increase in August.

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The minutes of the September FOMC Meeting just released last night failed to prop up US Dollar and thus weakened the world's superpower currency against other major currencies. Although it does not disturb the probability of an increase in interest rates at the end of the year, the minutes reveal the concerns of the meeting members in case the low inflationary conditions will last long.

In the minutes of the September FOMC Meeting, it was revealed that a majority of US Federal Reserve officials are still projecting a rate hike this year, as it is unlikely that there will be any shocks that will keep the economy "off track". They also assess the salaries of employees will continue to increase.

Meanwhile, the latest Job Openings and Labor Turnover Survey (JOLTs) data is also disappointing. JOLTs which became the barometer of labor demand in the US market, showed a decline in August with achievements only 6,082 million, below expectations at around 6.125 million. The previous period's data was also revised down to 6.140 million.

In response to this situation, US Dollar Index (DXY) closed down about two consecutive days yesterday to around 92.898 from 93.290 in the previous day.  It seems that the Dollar index is still slipping to around 92.866.

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The US dollar strengthened against other major currencies in Asian session Tuesday afternoon, supported by the rise in US Treasury bond yields due to Trump Effect. The US president, Donald Trump, is reportedly favoring the hawkish-hawned Fed Chairman to fill his term starting next year.

 

US Treasury bond yields bounced up from a two-week low and added to Monday's gains after President Trump declared his liking to Stanford's hawkish economist John Taylor. Compared to the current Fed Chairman, Janet Yellen, Taylor is more hawkish and does not rule out replacing Yellen.

 

USD / JPY declined 0.1 percent to 112.070, and traded at 112.122 after that comment. Meanwhile, EUR / USD declined 0.15 percent to 1.1780 and continued the decline to 1.1778 as the news was written. GBP / USD slipped 0.1 percent to 1.3241.

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The dollar soared against the yen on Friday this afternoon in line with rising market optimism about prospects of tax reform (tax reform) US. The US Senate has approved Trillion dollar worth of Trump's proposals for its tax reform agenda.

 

Thursday night US time, the vote in the Senate shows the acquisition of 51:49 to pass the blueprint of the budget worth trillions of Dollars to be used throughout the term of Trump. Rand Paul was listed as the only senator who rejected the blueprint.

 

As a result of this development, USD / JPY soared from 112.745 to 113.178. This level is the strongest since October 6th. In the short term, the US Dollar will strengthen against the yen.

 

The strengthening of USD / JPY is also supported by the differentiation of US and Japanese bond yields ahead of the upcoming Japanese elections on Sunday. Japan's own election is not widely expected to produce surprising results. The coalition of PM Shinzo Abe is widely expected to win two-thirds majority.

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Entering the European session on Tuesday this afternoon, it seems that the US Dollar began to show resistance by overthrowing other major currencies, having wavered in the previous session due to President Trump's statement about the election development of the Fed Chairman.

 

Earlier this morning, USD / JPY obaserved finally showed a rise about 0.3 percent and stayed a little longer to reach a three-month high reached on Monday after Prime Minister Shinzo Abe's victory in Japan's elections.

 

However, Reuters reports that most other Asian currencies other than Yen, looks a bit stronger against the US Dollar. The Singapore dollar led the gains against the US Dollar, trading at a price of 1,359 from the previous figure of 1.3618.

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Although slightly elevated, the US Dollar trend against the yen is still near a two-month low, with a short-term market focus on the Senate vote on US tax-cuts this week.

 

Market participants are also awaiting confirmation from Fed chairman Jerome Powell, who is scheduled to deliver his testimony tonight in front of the Banking Senate. In a preparatory speech before a testimony released last night by the Fed, Powell said it would continue monetary policy that has been implemented so far.

 

USDJPY is trading at 111.151, although it briefly peaked to a high of 111,327 this morning. The lowest level of USD / JPY since mid-September was at 110.85, formed on Monday. Concerns about delaying the implementation of US tax cuts until 2019, re-emerged and weighed on the strengthening of US Dollar in recent weeks. 

 

At the same time, the Japanese Yen also gained support from the wobbly risk appetite due to weakening Chinese equities in several trading sessions. Dollar Index, which measures the strength of the US Dollar against major currencies, slipped 0.1 percent to 92.841. EUR / USD which had climbed at the beginning of last week, now limp at low levels, with trading at 1.904.

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U.S. Dollar rose to a three-week high against a basket of currencies at the end of trading early with the start of a two-day Federal Reserve policy meeting expected to raise interest rates for the fifth time since 2015.

 

The dollar index reached new level at 94.219, the highest since November 14, before falling back towards 94.07. The dollar rose more than 1 percent last week, its biggest weekly gain since late October, but down about 9 percent this year.

 

Investors will see a signal that Fed officials are more optimistic about the prospect of faster growth as lawmakers appear to be approaching a major overhaul of the tax code as a clue as to how further interest-rate increases might be next year. The Consumer Price Index (CPI) data on Wednesday will be the key focus of data for further clues on price pressures.

 

Tonight will be released data on November US Inflation Rate indicated to increase. Also later in the day will be announced the US interest rate decision indicated to increase. Analysts expect the US dollar index will move up with an indication of rising inflation and rising US interest rates.

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The dollar retained its weakness in today's trading session this afternoon, after tumbling post the US Federal Reserve's monetary policy statement late on the night that raised interest rates according to expectations. Nevertheless, the Fed is considered less hawkish because it does not change the outlook rise in interest rates next year.

 

The monetary policy statement is also considered dovish. Especially because there are two voices of interest rate rises because it highlights inflation. That's what causes the US Dollar depressed and collapsed after the announcement of the policy.

 

The dollar index fell 0.65 percent to 93.48, the lowest level seen since it reached Dec. 7. The euro last rallied 0.64 percent at 1.1815 against the dollar, while USD/JPY traded at 112,602, up 0.2 percent erasing a 0.9 percent decline to a record low of 112,459 moments after the FOMC release.

 

Analysts estimated that US dollar index will move steadily with US interest rates rising, and if tonight the US economic data is realized increased, will strengthen the US dollar.

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The greenback(USD) slumped deeper in Thursday's trade (28 / December), with US Dollar Index (DXY) dipping around 0.41% to 92.645 early in the European session; its lowest level in the past month. The US dollar's weakness is due to the 10-year yield decline, while other currencies are supported by oil and metals prices this week.

The US Dollar Index has slumped about 9.2% this year, so if it continues it could be the record for the worst annual decline since 2003. This is due to the decline in US 10-year yields to 2.425 percent today. Yield Bond has moved backwards from its peak, and Dollar trades in a weak tone.

Other analysts also pointed to the weakening of Dollar as a result of short-term selling. Dollar declines may in part reflect a "sell-the-fact" reaction after the signing of US tax reforms. EURUSD rocketed to its highest level in more than three months. In this day alone, the most heavily traded currency pair in the world has gained 0.45% rise to 1.1940.

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US Dollar remained locked in its lowest point area for the last 3.5 months on Monday after US Non Farm Payroll failed to deliver momentum in expectations of sustained interest rate hikes in 2018. However, a number of policy makers are still convinced that interest rate hikes can be made according to previous plans

The Dollar Index was at 91,919, just a few points above 91,751 which tested on Jan. 2. The US employment data actually rose only 148,000 in December. This figure is far below the expectations of economists who estimate the workforce increment would be around 190,000.

Nevertheless, some officials of the Fed (Fed of the United States) issued a declaration of employment fell, they will still rise interest rates in 2018. USD on Monday strengthened the data post NFP on Friday . EUR/USD and GBP/USD fell by 0.02% and 0.11%, respectively. USD/JPY and USD/CHF rose by 0.11% and 0.10% respectively.