From 1995 to 2002 the DXY saw a rapid rise. The US economy was fueled by the DOTCOM boom and the Fed kept the interest low between 5-6% compared to its previous historical levels at 20% in the 1980s. However, the DOT COM Bust, saw interest rates collapse to.96%, and the DXY fell along with this.
The market is watching out for the FED meeting in Jackson Hole. This annual gathering will start on the 26th of August, and will be eagerly watched by the markets.
Do we expect an aggressive rate rise by .75% followed by another rise of .5% in december, which will take the rates to 3.5%, above the rates in 2019? Or will we see a muted rate rise in September, and a dovish position in December?
1. Inflation is really high, and rate rises can help cool it off.
2. But then too much rate rise can take money from the high street and put it in investments, make it more expensive for businesses to borrow, and therefore push the economy into recession.
J Powel is overseeing a tough decision making process this Autumn.
What does it mean for other currencies?
1. The EURO is at 0% interest rate, and the EU economists would like to see more money flow into the EU Markets. So they will match the rate rises in kind. So the Euro will probably see a move back towards 1.06-1.10.
2. Energy supply shortages will see a push towards renewables such as Offshore Wind.
3. Green Hydrogen generated using Wind and Solar will start seeing economies of scale benefiting the production costs.
4. Manufacturing will move from China towards India, South-East Asia, and LATAM, given the current geopolitical situation between the West and the Russia / China combine.
5. The Stock Market Bear Market Pullback is almost over, and the downward trend will restart.
Overall the Dollar Index against the basket of international currencies have reached close to its potential ceiling. It may rise upto 108 but I sincerely doubt it will rise further than that.
This would mean that Gold, Yen and Euro will soon start seeing a rise from September.
The market is watching out for the FED meeting in Jackson Hole. This annual gathering will start on the 26th of August, and will be eagerly watched by the markets.
Do we expect an aggressive rate rise by .75% followed by another rise of .5% in december, which will take the rates to 3.5%, above the rates in 2019? Or will we see a muted rate rise in September, and a dovish position in December?
1. Inflation is really high, and rate rises can help cool it off.
2. But then too much rate rise can take money from the high street and put it in investments, make it more expensive for businesses to borrow, and therefore push the economy into recession.
J Powel is overseeing a tough decision making process this Autumn.
What does it mean for other currencies?
1. The EURO is at 0% interest rate, and the EU economists would like to see more money flow into the EU Markets. So they will match the rate rises in kind. So the Euro will probably see a move back towards 1.06-1.10.
2. Energy supply shortages will see a push towards renewables such as Offshore Wind.
3. Green Hydrogen generated using Wind and Solar will start seeing economies of scale benefiting the production costs.
4. Manufacturing will move from China towards India, South-East Asia, and LATAM, given the current geopolitical situation between the West and the Russia / China combine.
5. The Stock Market Bear Market Pullback is almost over, and the downward trend will restart.
Overall the Dollar Index against the basket of international currencies have reached close to its potential ceiling. It may rise upto 108 but I sincerely doubt it will rise further than that.
This would mean that Gold, Yen and Euro will soon start seeing a rise from September.
