The US dollar remains under pressure on the wave of the continuing uncertainty factor regarding the prospects for further growth of the US economy, which signals its slowdown, as well as growth in connection with this expectation that the Fed may not only fail to carry out the two-fold increase in interest rates year but also pause in the process.
An important signal, which the markets heard on Thursday, was the comment of Fed member of the President of the Federal Reserve Bank of Dallas R. Kaplan, who bluntly stated that he was against further raising interest rates. He suggested not raising interest rates until it becomes clear where the economy will continue to move, in the direction of growth or a real emerging trend of the slowdown will only increase. And although Kaplan currently does not have the right to vote against the background of the current rotation in the American Central Bank, his words may already reflect the opinion of other Fed representatives who are voting and may influence the regulator's decision to raise borrowing costs.
Posted on Thursday, data on employment in the US private sector from the company ADP exceeded all expectations, showing a growth in the number of new jobs in December, 271,000 against the forecast increase of 179,000, but the negative was the revision of the November values down to 157,000.
At first, the dollar reacted to this data positively, "rising" against all major currencies, but then the following data from the index of business activity in the manufacturing sector from ISM put pressure on it. And the values of the indicator were really disappointing. The indicator fell in December to 54.1 points against the November value of 59.3 points and the forecast of a decline to 57.9 points.
As we mentioned above, the worst expectations regarding the slowdown of the American economy are justified, which may force the Fed to pause in raising interest rates, in an effort to observe the dynamics of the national economy. Given the growth of this probability, most likely, high volatility and growth in demand for the Japanese yen, as well as the Swiss franc, will continue to be observed in the foreign exchange market. Strengthening the yen in this situation may not even contain the likely foreign exchange intervention by the Central Bank of Japan.
Forecast of the day:
The EUR / USD currency pair continues to be in the range of 1.1270-1.1460. In the wake of the weakness of the US dollar, the pair may continue to climb to the upper limit of the 1.1460 range after fixing above the 1.1400 level.
The USD / CAD currency pair is trading lower on the back of weakness in the US dollar and rising crude oil prices. If these factors remain, and the price consolidates below 1.3435, there is a chance that it will continue to fall to 1.3365.
