News & Resources

Market Analysis

Latest Insights
Press Releases
Latest Insights

Daily Market Analysis
Dollar Doldrums

by Sean Coakley | August 17, 2016

Some of the pain felt by those long the US dollar has begun to recede as the mighty greenback begins to stabilize after a rough few days. With inflation, or the lack of it rather, becoming a major turning point for dollar traders this week as the number failed to hit expectations, the stage is set for further movement later today after traders get the chance to parse the FOMC`s meeting minutes for any signs of an impending rate rise.

With trading in Asia winding down, the yen has been one of the leading decliners against the stabilizing dollar. This obviously has alleviated some of the pressure placed on the BoJ as earlier the bank signaled concern around the relative strength of the yen and its impact on the export sector despite the unprecedented level of monetary stimulus currently being conducted in Japan. Looking further south both the Aussie and Kiwi dollars took knocks against their American counterpart while employment and wage data in NZ came in better than expected. Outside of forex, markets are shrugging off the hit taken by Wall Street as equities across Asia flash green.

Moving onto Europe, Brent crude has begun to slip as traders take profits off the back of its recent rumour-fuelled run higher while equities across the region are trading on a down note. With the greenback stabilizing the pound is one of the few currencies showing signs of life against the cross while its continental companion slides against both it and the US dollar. Much of the strength in the pound can be attributed to recent payroll and wage data that more or less met expectations despite concerns around a decent into post-Brexit malaise.

Ahead of the open stateside, equities futures are signaling that the declines seen yesterday are likely to continue once equity markets start trading. With rapidly shifting expectations concerning the timing of the Federal Reserve`s rate rise being the single largest driver of the recent volatility in the US dollar, there is growing risk that the probability of another rate increase before the end of 2016 is being discounted.  That said the release of the Fed`s meeting minutes along with US oil inventories later today is likely to grant traders the data points they need to calibrate their assumptions, with a more hawkish than expected  Fed along with continued record inventories likely spelling a world of pain for the Canadian dollar.

To receive our market analysis direct to your inbox daily subscribe here!

“Cambridge Global Payments” is a trade name, which in this document refers specifically to one or more of these legal entities: Cambridge Mercantile Corp., Cambridge Mercantile Corp. (U.S.A.), Cambridge Mercantile Corp. (Nevada), Cambridge Mercantile (Australia) Pty. Ltd.

Cambridge Global Payments (“Cambridge”) provides this document as general market information subject to: Cambridge’s copyright, and all contract terms in place, if any, between you and the Cambridge entity you have contracted with. This document is based on sources Cambridge considers reliable, but without independent verification. Cambridge makes no guarantee of its accuracy or completeness. Cambridge is not responsible for any errors in or related to the document, or for damages arising out of any person’s reliance upon this information. All charts or graphs are from publicly available sources or proprietary data. The information in this document is subject to sudden change without notice.

Cambridge may sell to you and/or buy from you foreign exchange instruments (including spot and/or derivative transactions; both kinds are here called “FXI”s) covered by Cambridge on a principal basis.

This document is NOT: 1) Advice of any kind, or 2) Approved or reviewed by any regulatory authority, or 3) An offer to sell or a solicitation of an offer to buy any FXIs, or to participate in any trading strategy.

Before acting on this document, you must consider the appropriateness of the information, based on your objectives, needs and finances. For advice, you must contact someone independent of Cambridge.

Certain FXIs mentioned in this document may be ineligible for sale in some locations, and/or unsuitable for you. Contact your Cambridge representative for further information regarding product availability/suitability before you enter into any FXI contract.

FXIs are volatile and may cause losses. Past performance of a FXI product cannot be relied on to determine future performance.

This document is intended only for persons in Canada, the US, and Australia. This document is not intended for persons in the UK or elsewhere in the EEA. In Australia, this publication has been distributed by Cambridge Mercantile (Australia) Pty. Ltd. (ABN 85 126 642 448, AFSL 351278); for the general information of its customers (as defined in the Corporations Act 2001). This entity makes no representations that the products or services mentioned in this document are available to persons in Australia or are necessarily suitable for any particular person or appropriate in accordance with local law.

Fees may be earned by Cambridge (and its agents) in respect of any business transacted with Cambridge.

The document is intended to be distributed in its entirety. Unless governing law permits otherwise, you must contact the applicable Cambridge if you wish to use Cambridge services to enter a transaction involving any instrument mentioned in this document.

© Copyright 2018, Cambridge Mercantile Corp., ALL RIGHTS RESERVED. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of Cambridge Mercantile Corp. See www.cambridgefx.com for contact details.