Weekly Fundamental US Dollar Forecast: Taper Talk To Intensify At September Fed Meeting

Weekly Fundamental US Dollar Forecast: Taper Talk to Intensify at September Fed Meeting

Fundamental Forecast for the US Dollar: Neutral

  • The US dollar (via the DXY Index) gained +0.65% last week on the back of rising Fed rate hike odds.
  • Bond and rates markets are now the most aggressive in their hawkish expectations of the Federal Reserve all year.
  • According to the IG Client Sentiment Index, the US dollar has a bullish bias ahead of the September Fed meeting.

US Dollar Aims Higher

After a rocky first few days, the US dollar (via the DXY Index) gained +0.65% last week on the back of rising Fed rate hike odds. Bond and rates markets are now the most aggressive in their hawkish expectations of the Federal Reserve all year. The largest component of the DXY Index, EUR/USD rates, dropped by -0.71 %, while USD/JPY rates gained +0.09%, hampered by weakness in equity markets.

Elsewhere, gains by the greenback were equally if not more pronounced: GBP/USD fell -0.69%; AUD/USD dropped -1.18%; NZD/USD sank -1.06%; and USD/CAD added +0.65%.

US Economic Calendar Packed, Eyes on Fed Meeting

The middle of September will produce another busy docket of event risk based out of the US. Of course, many of the data releases may see reduced importance as the September Fed meeting dwarfs all else.

  • On Monday, Sept. 20, the September US NAHB housing market index will be released.
  • On Tuesday, Sept. 21, August US building permits and August US housing starts data are due.
  • On Wednesday, Sept. 22, weekly US MBA mortgage applications and August US existing home sales will be released in the morning, while the September Fed meeting and press conference by Fed Chair Jerome Powell will take place in the afternoon.
  • On Thursday, Sept. 23, the August US Chicago Fed national activity index, weekly jobless claims figures, the September US Markit manufacturing PMI (flash), and August US CB leading index are all due.
  • On Friday, Sept. 24, the August US new home sales report will be released and Fed Chair Powell will deliver a speech.
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For full US economic data forecasts, view the DailyFX economic calendar.

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