The U.S. Dollar weakened over the weekend following a week of solid performance resulting from policy divergence. Other major central may be positioning themselves to further aid their respective ailing economies, but the Fed is expected to increase interest rates on December 14th. Traders are confident after indicators confirmed a rise in orders and further improvement in various sectors of the economy. The Bloomberg Dollar Spot Index is almost 1.0% up from last week.
Without any significant data today we expect calm to reign over FX markets as all observers stay put ahead of the FOMC announcement on Wednesday. We may see appreciation on the side of petro-currencies benefitting from agreed oil production cuts by Russia.
The Euro recovered some ground after a very dire Friday in which investors dumped their Euro positions fearing further devaluation from Draghi’s dovish comments. The euro-zone’s economy is admittedly in need of more help and the ECB agrees.
2017 is planned to be a year of ongoing intervention and monitoring, but the central bank and its officials are demanding that governments increase their role in rolling back spending cuts that are holding back nations from growing. We see current ranges remaining until the end of the year unless a dramatic shift in policy is revealed by the U.S. Fed in the middle of the week.
The Yen fell as capital markets continue to attract action in late 2016. The prospects of expanding monetary easing measures by the Bank of Japan are also starting to weigh in on the safe-haven currency. With a sell-off in bonds, risk-appetite and Japan’s need for an invasive economic plan of spending, JPY may be weaker in the short-term.