The weekly decline in the dollar will be narrowly volatile
Posted by Emvertex
The dollar was little changed as the minutes of the fed’s January meeting maintained a “dovish” tone, indicating flexibility on whether to raise interest rates and considering a possible end to its tightening soon.Despite recent optimism about the outcome of the u.s.-china trade talks, franklin said there is still some safe-haven demand for the dollar as the March 1 deadline approaches, but the fed will continue to favor a dovish tone and limit dollar moves.
U.S. President Donald trump signaled his willingness to delay a March 1, 2019 deadline to complete trade talks with China, and new orders for non-defense capital goods excluding aircraft fell 0.7 percent in December, the fourth decline in five months, with the dollar index falling 0.41 percent on a weekly basis.
While the euro zone’s preliminary manufacturing purchasing managers’ index for February came in at 49.2, below market expectations, a better than expected reading on economic sentiment and consumer sentiment lifted the euro’s weekly gain by 0.35 percent.The Australian dollar briefly fell after a report that Chinese customs had banned imports of Australian coal, but the reserve bank of Australia sounded upbeat and government officials downplayed the news, with the currency losing 0.2 percent of its weekly value.
Emerging currencies were mixed, with Argentina’s weekly peso losing 1.43 percent after higher-than-expected inflation in January and a drop in real interest rates after the central bank cut its seven-day repo rate.Brazil’s pension reform plan has been sent to parliament, but the market is cautious about the progress of the pension reform plan, the weekly value of the Brazilian real fell 1.22%.
South Africa’s currency was also volatile, rising 0.54 percent on a weekly basis, after the government said it would inject capital into the state-owned electricity company Eskom, after the country reported its fiscal budget for the current fiscal year and forecast a fiscal deficit of 4.5 percent of gross domestic product, the highest since 2010.
It is expect that that majority of non-us currency currencies have been react to the doves and that the euro will be more limited, and that the euro zone’s weak economy will not be enough to support the euro, the gap between the European and European countries is still in place, and that the rise of populism in the euro zone also lead to a long term problem of political cohesion.
The Brazilian real, by contrast, is seen as a positive play on emerging market currencies, with room for appreciation as pension reform moves forward and the economy improves and the currency remains undervalued. Citi said the report pointed to the yuan’s commitment to stability and the fed’s dovish view of the recent performance of emerging market currencies.