10.12.2019: USD subdued as traders await crucial events (USDХ, CAD, JPY)


The US dollar is still trading cautiously against a basket of its rival currencies. Traders are hesitant to open risky bets ahead of several crucial events. This week, the US Fed and the ECB are holding policy meetings. Besides, the US President has to take a decision whether to slap tariffs on China’s imports in mid-December. In this context, investors are braced for market turbulence. The US dollar opened this trading week with a rally which has fizzled out. Today its index settled down at near 97.53,
the lowest level since early November. The greenback’s trajectory is now highly
sensitive to Donald Trump’s decision on tariffs. The market finds it difficult to predict that
he will actually greenlight the new round of tariffs. So, this event entails the major risk of the
week. It even overshadows the final policy meeting
of the Federal Reserve this year. The regulator is widely expected to leave
rates unchanged. Traders are most interested in rhetoric of
Jerome Powell and his forward guidance for the next year. If Donald Trump does not confirm the imposition
of tariffs in the nearest two days, the US dollar is likely to gain ground. However, the US leader could make the announcement
on late Friday after the market closes. In this case, investors will give a response
next week. Meanwhile, Washington is set to impose new
tariff hikes on $160 billion of Chinese goods on December 15, if the two sides fail to reach
an accord. One of the most vulnerable currency pairs
this week is the dollar/yen pair. If the US presents upbeat inflation and retail
sales data, the central bank will add hawkish notes and Donald Trump will not insist on
the new round of tariffs. In this case, the dollar/yen pair could climb
above the level of 109. Nevertheless, it is trading lower at near
108.54 in the New York trade. The US dollar sank against another safe haven
asset, the Swiss franc. The Canadian dollar firmed a bit, taking advantage
of the weaker American counterpart and rising oil prices. The USD/CAD pair made a correctional decline
to 1.3222. Then, the pair consolidated at near the support
level. Analysts assume that the correction is coming
to an end with prospects of a further climb. Support is expected to subdue attempts to
move lower. If the price rebounds from 1.3226, it will
head for the resistance level of 1.3295. It would be a good idea to take notice of
the US labor productivity data, in particular a measure of output per hour and a unit of
labor costs. These metrics measure the US overall economic
health, making an impact on GDP forecasts. So, these indicators could increase volatility
of the US dollar.

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