Latest developments:
April 14 – US coronavirus cases increased to 32,149,660 (+78,876) with cases in California increasing by 2,458, cases in Texas increasing by 3,493 and cases in Florida increasing by 6,772.
April 13 – US CPI for March printed at 0.6% M/M and 2.6% Y/Y, compared to February’s 0.4% M/M and 1.7% Y/Y. Core CPI printed at 0.3% M/M and 1.6% Y/Y versus 0.1% and 1.3% prior.
April 2 – US employment for March saw the unemployment rate fall to 6.0% from a prior of 6.2%, while non farm payrolls printed at 916K for the month.
March 25 – Final GDP for Q4 printed at 4.3% compared to the second estimate of 4.1%. The BEA noted: “The upward revision primarily reflected an upward revision to private inventory investment that was partly offset by a downward revision to nonresidential fixed investment”.
March 17 – At their March meeting, the FOMC left the FED Funds Rate (FFR) unchanged and asset purchases at a total of $120 billion per month. The updated economic projections continue to show the central bank does not expect to raise rates through all of 2023 based on its median dot plot; although, four members now see a hike in 2022 and seven see a hike in 2023.
Future sentiment shifts:
Unprecedented easing from the FED in 2020 and expectations for prolonged easy policy following the Fed’s adoption of AIT are arguably the most bearish factors for USD at present.
However, in the short term, rising US yields and expectations for a strong fiscal response have been and will likely remain supportive for the world’s reserve currency.
Additionally, progress regarding the coronavirus in the US will also remain key; but with the country now rolling out vaccines, the long run economic outlook is becoming increasingly optimistic.
Primary drivers:
Federal Reserve – The US’ monetary policy outlook remains highly influential to USD’s fundamental outlook.
Policy easing from the FOMC is already at unprecedented levels, and expectations regarding the duration and extent of their emergency measures will continue to influence USD’s fundamental outlook. Further and more aggressive easing from the Fed will likely weigh on USD, while expectations for eventual tapering and policy normalization will likely prove supportive.
Risk Tone – As the world’s reserve currency, USD is the most liquid currency in the world, and consequently, the ultimate safe haven. Although USD does not always exhibit safe haven properties, when markets begin to panic and participants dump almost all other assets to rush into cash, USD becomes the safe haven of choice.
April 14 – US coronavirus cases increased to 32,149,660 (+78,876) with cases in California increasing by 2,458, cases in Texas increasing by 3,493 and cases in Florida increasing by 6,772.
April 13 – US CPI for March printed at 0.6% M/M and 2.6% Y/Y, compared to February’s 0.4% M/M and 1.7% Y/Y. Core CPI printed at 0.3% M/M and 1.6% Y/Y versus 0.1% and 1.3% prior.
April 2 – US employment for March saw the unemployment rate fall to 6.0% from a prior of 6.2%, while non farm payrolls printed at 916K for the month.
March 25 – Final GDP for Q4 printed at 4.3% compared to the second estimate of 4.1%. The BEA noted: “The upward revision primarily reflected an upward revision to private inventory investment that was partly offset by a downward revision to nonresidential fixed investment”.
March 17 – At their March meeting, the FOMC left the FED Funds Rate (FFR) unchanged and asset purchases at a total of $120 billion per month. The updated economic projections continue to show the central bank does not expect to raise rates through all of 2023 based on its median dot plot; although, four members now see a hike in 2022 and seven see a hike in 2023.
Future sentiment shifts:
Unprecedented easing from the FED in 2020 and expectations for prolonged easy policy following the Fed’s adoption of AIT are arguably the most bearish factors for USD at present.
However, in the short term, rising US yields and expectations for a strong fiscal response have been and will likely remain supportive for the world’s reserve currency.
Additionally, progress regarding the coronavirus in the US will also remain key; but with the country now rolling out vaccines, the long run economic outlook is becoming increasingly optimistic.
Primary drivers:
Federal Reserve – The US’ monetary policy outlook remains highly influential to USD’s fundamental outlook.
Policy easing from the FOMC is already at unprecedented levels, and expectations regarding the duration and extent of their emergency measures will continue to influence USD’s fundamental outlook. Further and more aggressive easing from the Fed will likely weigh on USD, while expectations for eventual tapering and policy normalization will likely prove supportive.
Risk Tone – As the world’s reserve currency, USD is the most liquid currency in the world, and consequently, the ultimate safe haven. Although USD does not always exhibit safe haven properties, when markets begin to panic and participants dump almost all other assets to rush into cash, USD becomes the safe haven of choice.