US Dollar Index
While everything has already been priced in, The US Dollar index has been trading higher since April 2018, the index traded higher to the resistance level at 103.343, and then fell back to the range between 93.295 - 100.625.
Some of the factors that has a direct relationship to the index, we look at the Fed's Monetary policy, The Fed's has already cut the interest rates by the total of 150 points which included two emergency rates cuts, currently at 0-25%, the committee has ruled out any further rates cut in the near future, most importantly negative rates. There has been so much of quantitative easing in the process with the FED's balance having expanded enormously. The expectation is that in the next meeting on the 10th of June, the rates will be kept at 0.25%.
However, the unemployment rates has fallen to the lowest from 4.4% in March to 14.7% in April, the worst is expected for May due to the economy being inactive, whilst the recovery might take longer but from June 20 things may start getting better as the economic active will resume again but at a slow pace due to the risks factors that comes with the virus.
The NFP has also worsen from +230K in February, -870k March and -20.500M April, with even worse numbers expected in June.
The PMI numbers for both service and Manufacturing has been at its worst due to the effect of the virus and also expected to improve in June and going forward.
The economy is expected to contrast in the first quarter and pick up at a slow pace in the second quarter.
The are lot of factors to consider and also taking into account the possibility that we might also be affected with the second wave of coronavirus and as well as any developments on the VACCINE.
With all the above being said and also having already hit the bottom, I believe these factors are enough to support the DXY index to trade higher for the foreseeable future.
Please provide comments below if you would like to add anything.
Some of the factors that has a direct relationship to the index, we look at the Fed's Monetary policy, The Fed's has already cut the interest rates by the total of 150 points which included two emergency rates cuts, currently at 0-25%, the committee has ruled out any further rates cut in the near future, most importantly negative rates. There has been so much of quantitative easing in the process with the FED's balance having expanded enormously. The expectation is that in the next meeting on the 10th of June, the rates will be kept at 0.25%.
However, the unemployment rates has fallen to the lowest from 4.4% in March to 14.7% in April, the worst is expected for May due to the economy being inactive, whilst the recovery might take longer but from June 20 things may start getting better as the economic active will resume again but at a slow pace due to the risks factors that comes with the virus.
The NFP has also worsen from +230K in February, -870k March and -20.500M April, with even worse numbers expected in June.
The PMI numbers for both service and Manufacturing has been at its worst due to the effect of the virus and also expected to improve in June and going forward.
The economy is expected to contrast in the first quarter and pick up at a slow pace in the second quarter.
The are lot of factors to consider and also taking into account the possibility that we might also be affected with the second wave of coronavirus and as well as any developments on the VACCINE.
With all the above being said and also having already hit the bottom, I believe these factors are enough to support the DXY index to trade higher for the foreseeable future.
Please provide comments below if you would like to add anything.
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