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All eyes on the Fed to drive the dollar this week

Last updated: May 3rd, 2017 at 09:58 pm

There is a constant swing higher and lower on the dollar at the moment and with all eyes on the Fed meeting this is likely to continue to drive market sentiment this week. The significant disappointment of the Non-farm Payrolls report just over a week ago appears to have completely priced out the possibility of a rate hike at the June meeting this week. However, that is not to say that this will be a dull meeting. It is a meeting where the FOMC members update expectations for inflation and growth and make any changes to the infamous dot plots. These dot plots help to mould expectations of how many rate hikes could be seen in the coming years, with attention especially paid to the number of hikes expected this year. Having moved from an expectation of four hikes back in December, the March meeting was drastically revised to just two and the dollar had a significant repricing. Any further changes to the dot plots could have a significant impact on the dollar again.

With the Fed just one of four major central banks to announce monetary policy this week we look at the other key economic releases that could be set to impact markets. The dollar moves and the concerns over global growth have driven some huge moves on forex majors in the past few weeks. But what are the expectations of these central bank decisions? We also take a look at the technical analysis of EUR/USD and a significant move on Cable in the run up to the Brexit decision. How are equity markets being impacted by the reduction in risk appetite? We take a technical analysis of the German DAX Xetra which is under pressure and consider whether the S&P 500 is on the brink of a sustained correction. With the moves on the dollar impacting across asset classes, what is the outlook for key commodity markets with the gold price having had such a strong run and the oil price threatening a correction? We finish with a technical analysis of gold and Brent Crude oil.

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At Hantec Markets Ltd we provide an execution only service. Any opinions expressed by analyst Richard Perry should not be construed as investment advice or an investment recommendation. This report does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. Forex and CFDs are leveraged products which can result in losses greater than your initial deposit. Therefore you should only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved, seeking independent advice if necessary prior to entering into such transactions.