The Effects Of Powell’s Dovishness On The Dollar
Analysts suggest that a hawkish Powell will be beneficial to the Euro. Despite repeated calls by three Fed members – Robert Kaplan, Esther George, and James Bullard, it is unlikely that Powell’s speech will offer any hint about tapering stimulus. Apart from these fed members’ comments, the unfortunate incidents in Afghanistan created a surge towards the dollar.
A hawkish stance and a relative dollar demand might weaken the greenback. However, data from the US Core PCE is predicted to rise by 0.1% compared to the previously released data. The Euro might benefit from the increase in German import prices and reducing cases of the pandemic across Europe.
The key resistance will be at the 1.1781 level – the 1-week high. Other key resistance levels will be 1.1806, 1.1826, and 1.1861. 1.1741 is the main support, while other supports include 1.1726, 1.1696, and 1.1661.
AUD/USD Stages A Modest Rebound
The AUD/USD rallied today to move towards the positive territory after the loss on Thursday. As of this time, the AUD/USD has surged by 0.24% on the 24-hour chart and trades at 0.7251.
Australia’s retail sales date decreased by 2.8% month on month last month. A figure that was still better than the forecasted 2.4%. However, the AUD/USD still edged higher. However, the USD isn’t finding it difficult to consolidate on yesterday’s gains with traders solely focused on the Jackson hole symposium.
Thus, the AUD/USD consolidating on its 24-hour profits. Today, the dollar index is flat at 93.04 despite rising 0.26% following a 4-day run of successive losses. If Powell hints at a winding down in the fed’s asset purchase program, the USD will gain strength and possibly, turn the AUD/USD bearish. However, the fed’s choice of inflation index (the PCE data) will be released in the American session.
New Zealand Dollar Had A Good Rally This Week
This week, the Jackson hole symposium’s expectations weakened the USD and provided the NZD/USD a good bullish run. Traders usually regard the Kiwi as a high beta currency and might make a big move provided there is no market surprise.
The rising COVID-19 cases have lowered expectations from the fed chair’s speech at the symposium today. Hence, most traders suggest that the outcome of next month’s fed meeting will provide a better hint regarding the stimulus package withdrawal.
A Bearish EUR/NOK Is Quite Possible
In late April 2021, EUR/NOK dropped to a 12-month low of 9.8986. But it has since rallied to a peak price of 10.7945 last month, and now, it is increasingly possible for a decline below 9.90 even in the short term.
The interest rate will be the key determinant factor. Many traders were surprised when New Zealand’s reserve bank didn’t modify the 0.25% rate as the official cash rate. Many were expecting this rate to change amidst rising cases of the COVID-19 delta variant. If Norway’s apex bank had obliged the market sentiments, it would have been the first apex bank among the developed economies to hike rates.