The dollar was strong today, as the world entered a New Year. However, economic analysts advised that much of the US and the UK are still on holidays and this has helped the dollar to remain firm.
However, as previously discussed in the blog, it is expected that the Federal government will announce an interest rate hike sometime tomorrow or by the end of this week, which will greatly affect the dollar. According to Michael Klawitter, strategist at WestLB, “Tomorrow’s FOMC minutes are expected to emphasize the solid growth and potential inflationary impact in the US economy, thereby leaving the door open for hiking fed funds beyond 4.50 pct,” Klawitter stated.
Other than the increase in the interest rates, the monthly ISM survey will be released outlining an increase of 200,000 jobs. This will also have an impact at value in which the dollar is traded at.
As noted in previous blogs, it will be also interesting to see how the possible upcoming announcement of an increase of interest rates by the ECB will affect the dollar and the European currencies it trades against.
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