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Forex Market News - Dollar Faces Weekly Drop Again as Positive Data not Enough, Experts Warn
The dollar looks set to post a second-straight weekly decline Friday, shrugging off a wave positive data earlier in the week , and can still do so as most of the great news has already been priced in, Commerzbank (DE:CBKG) said.
The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.01% to 91.55.
Data earlier in the week including retail sales and initial jobless claims surprised to the upside, but that drew little support to the dollar. The humdrum reaction suggests "the positive effect of Biden’s economic stimulus package and good vaccination progress within the US is essentially priced in," Commerzbank said. "Strong U.S. data cannot support the U.S. dollar."
With most of the strong data and positive vaccine news now priced in, the greenback will struggle to form gains within the short-term.
The immediate horizon, meanwhile, doesn't offer much reason for optimism for dollar bulls. A hand from the the Federal Reserve System remains always off as Chairman Jerome Powell said the central bank was "highly unlikely" to boost rates before 2022.
"We've said we expect to stay rates where they're until meet three-part test," Powell said Wednesday at a virtual event organized by the Economic Club of Washington. The three part test includes maximum employment, inflation reaching 2%, and on target to run moderately above 2% for a few time.
Biden’s new infrastructure plan, aimed toward long-term economic momentum, however, could provide the ammo needed for the dollar to rediscover its form, but progress on the legislative measure is unlikely until the summer.
"The infrastructure plan is contentious, and if it were to pass Congress, would only become more concrete within the summer, […] for now, the plans are too abstract to support the dollar on a sustainable basis," Commerzbank added.
The dollar looks set to post a second-straight weekly decline Friday, shrugging off a wave positive data earlier in the week , and can still do so as most of the great news has already been priced in, Commerzbank (DE:CBKG) said.
The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.01% to 91.55.
Data earlier in the week including retail sales and initial jobless claims surprised to the upside, but that drew little support to the dollar. The humdrum reaction suggests "the positive effect of Biden’s economic stimulus package and good vaccination progress within the US is essentially priced in," Commerzbank said. "Strong U.S. data cannot support the U.S. dollar."
With most of the strong data and positive vaccine news now priced in, the greenback will struggle to form gains within the short-term.
The immediate horizon, meanwhile, doesn't offer much reason for optimism for dollar bulls. A hand from the the Federal Reserve System remains always off as Chairman Jerome Powell said the central bank was "highly unlikely" to boost rates before 2022.
"We've said we expect to stay rates where they're until meet three-part test," Powell said Wednesday at a virtual event organized by the Economic Club of Washington. The three part test includes maximum employment, inflation reaching 2%, and on target to run moderately above 2% for a few time.
Biden’s new infrastructure plan, aimed toward long-term economic momentum, however, could provide the ammo needed for the dollar to rediscover its form, but progress on the legislative measure is unlikely until the summer.
"The infrastructure plan is contentious, and if it were to pass Congress, would only become more concrete within the summer, […] for now, the plans are too abstract to support the dollar on a sustainable basis," Commerzbank added.