13.09.2019: USD trading cautiously ahead of Fed’s rate cut (USDX, JPY)


In a widely expected move, yesterday the ECB
cut the deposit facility rate and introduced the new two-tier system of applying the deposit
rate. Besides, the regulator made a surprise decision
to resume the bond-buying program from November 1. Now traders express hopes that the US central
bank will follow the same course at a policy meeting slated for September 18. The Federal Reserve is likely to ease monetary
policy and lower the official funds rate to 2.00%. The US dollar index which tracks the dynamic
of the greenback against a basket of six major currencies is now heading downward steadily
after a roller coaster yesterday. Its price settled down at 98.10. Meanwhile, traders are selling the safe haven
dollar in favor of higher-yielding and riskier assets. Optimism among investors is underpinned by
obvious progress in the trade relations between the US and China. US President Donald Trump said on Thursday
he would not rule out an interim trade pact with China. What is more, the US leader is ready to restart
talks with North Korea. The yen is pinned near a six-week low versus
the US dollar on Friday. The greenback rose to 108.26 versus the yen,
the highest level since August 1. The greenback is up 1.2% versus the yen this
week, on course for its best weekly performance since November 2018. Yesterday, the dollar/yen pair retreated to
107.50 in light of another attack from Donald Trump on the Federal Reserve. However, the US currency finds support from
a spike in US Treasury yields, with the benchmark 10-year yield at a five-week high. After turbulent Thursday, the economic calendar
lacks important economic data from Europe on Friday. So, the market is going to monitor news on
Brexit-related events trade developments. During the North American trade, the US is
due to release data on retail sales, import price index, and a consumer sentiment index
from the University of Michigan.

Leave a Reply