Dollar mixed against most of its major rivals prior to unemployment claim data release

The year 2017 has been very problematic for the traders as no investors have any clear clue regarding the next step of the U.S administration. The green bucks gained their strongest bullish momentum prior to the closing of the year 2016, after the FED hiked their interest rate and projected a three-rate hike for the year 2017. The optimistic dollar bulls gained their first fresh buying pressure after the U.S presidential election was held on 8th November 2016. When Mr. Trump won the White House, he declared that they were going to increase the fiscal spending and include tax cut policy to stabilize their economy. Such an optimistic statement from the newly elected president gave the dollar a strong bullish steam, which pushed most of its major rivals lower. But things drastically changed after the market absorbed the rumor or Mr. Trump’s significant delay of the implementation of tax cut policy, which created an extreme level of negative consumer sentiment. However, the dollar still traded mixed against most of its major rivals in the early part of the year 2017 as FED officials declared three projected rate hikes. So far the FED chairperson Janet Yellen has managed to implement two rates and still another rate hike is imminent in the U.S economy.

Positive housing data supports the dollar bulls

Most of the leading investors in the global market are in doubt regarding the dollar bull’s strength due to the ongoing weak performance in the U.S economy. Despite the rate hike, the U.S dollar index sharply fell for the last 6 months as most of the important economic sectors in the U.S struggle pretty hard. The upbeat holding data released on Wednesday came out on 1.25M whereas the forecasted data was only 1.2M. This significant improvement in the U.S housing section helped the dollar index to gain 0.14 percent in the global market. Upon the release of the U.S housing data, the dollar index traded at 94.58. Currently most of the leading investors are still on the fence due to the pending unemployment claim data release on this Thursday. A strong positive data release will significantly help the dollar bulls to retrain their current strength. However, a negative data released on the U.S unemployment claim will wash away all the gains of the dollar for this week and impose a fresh bearish threat to the green bucks. The jump of the U.S housing starts gained near about 8.3 percent, a level not seen since February 2017. This helped the dollar bulls to compete with their major rivals in the global market to great extent.

Impact on the currency market

Most of the major rivals were trading higher against the green bucks in the global market from the very beginning of the year 2017. Even the Pound Sterling recovered its losses to a great extent since the Brexit event and crossed the psychological mark of 1.3000. The dollar bulls managed to push the EURO lower and the EURUSD pair traded at 1.1521 with 0.29 percent loss. However, most of the leading investors are still waiting for the ECB press conference scheduled this Thursday, as a hawkish statement from ECB president Mario Draghi will significantly boost the EURO against the green bucks. On the contrary, a dovish statement will act as strong catalyst for the sellers to take control of the EURO at the current market conditions. The USDJPY pair also bounces off from the 200 days SMA on the daily chart after the BOJ monetary policy meeting held on this Thursday morning. Though the U.S dollar is subdued in the global market, the optimistic dollar bulls are still expecting a strong turnaround.

Possible market consequence

This month is almost over and all the leading investors are currently eyeing on the U.S unemployment claim data release. Though a strong positive data release will push the dollar higher in the global market some of the leading investors still doubt the long-term strength of the green bucks. Despite the weak performance in the U.S economy, the FED has to hike their interest rate two times during the year 2017, and some of the leading economists are thinking that such an immature rate hike will push the dollar lower in the long term. On the contrary, the U.S central bank will also pressurize the FED for another rate hike prior to the closing of the year 2017, so that they can adjust the current inflation rate for better stability in their economy. If the FED comes up with another rate hike program, the green bucks will gain a temporary bullish strength, but the question will still remain – as there is no visible progress under the new U.S administration. But things are totally unpredictable as no one is certain what Mr. Trump will do to push the economy in the global market.

Summary:

Currently all the leading investors are thinking about the pending rate hike program in the U.S. The FED officials have not yet given us any clear clue regarding their next step but according to some currency strategists, there might be no more hike for the year 2017. Things are totally uncertain as a decent progress in the other sector of U.S. economy will force the U.S. central bank to push FED for another rate hike. On the contrary, the recent upbeat housing data will also help the FED implement another rate hike. Currently, we are considering the U.S unemployment claims data as one of the key turning points. Considering all the parameters, it’s still better to stay on the fence until the dust settles down in the global industry.