• 253 days Will The ECB Continue To Hike Rates?
  • 253 days Forbes: Aramco Remains Largest Company In The Middle East
  • 255 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 655 days Could Crypto Overtake Traditional Investment?
  • 659 days Americans Still Quitting Jobs At Record Pace
  • 661 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 664 days Is The Dollar Too Strong?
  • 665 days Big Tech Disappoints Investors on Earnings Calls
  • 666 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 667 days China Is Quietly Trying To Distance Itself From Russia
  • 668 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 672 days Crypto Investors Won Big In 2021
  • 672 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 673 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 675 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 675 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 679 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 679 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 680 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 682 days Are NFTs About To Take Over Gaming?
Billionaires Are Pushing Art To New Limits

Billionaires Are Pushing Art To New Limits

Welcome to Art Basel: The…

Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

  1. Home
  2. Markets
  3. Other

The US Dollar Could Soon Bottom Out

The US will continue to unleash its bond-buying program, while Europe could cut rates again in the coming months. The US dollar should rise against major currencies until the middle of the year.


US: Tightening continues

After January and February, the Fed will proceed with its tapering program for an undefined period of time. The announcement was also confirmed by Mr. Williams, the president of the Federal Reserve of San Francisco, who is considered a dove. Mrs Yellen said, during the Senate Banking Committee hearing on Thursday, the Fed is watching economic data very closely. In reality, the latest economic data has been tepid in the US. As an example, in January, industrial production declined 0.3%, while manufacturing slumped 0.8%. The deterioration is confirmed by the manufacturing survey from the Federal Reserve banks of New York and Philadelphia. Jointly, the two indexes lost almost three points from January to February. Nonetheless, the employment component stayed, strong at 54.2. Perhaps, it is anticipating a rebound in the coming months. In effect, the bad weather might have played a role in the latest economic slowdown Housing starts fell 16% in December and are now at the lowest level since 2011, on the year-to-year basis.


ECB: Cutting or not cutting>

The ECB is one of the few central banks that have room to cut interest rates from 0.25% to 0.10%. Will the ECB do it? The economy in Europe is picking up, but there is no evidence of acceleration yet. In February, the composite PMI, which mirrors the GDP, was almost 53 for the eurozone. Manufacturing is beginning to perform well. Good numbers in business expectations and new orders seem to anticipate further growth. Germany is, once more, leading the way. Its economy is close to showing signs of expansion. In the last quarter of 2013, exports rose 2.6% compared to the previous quarter, while business confidence is at the highest of the past 2.5 years. Nevertheless, employment stays subdued in the whole eurozone and inflation is mild. In January, the Eurozone's inflation rate fell to 0.7%. If the ECB does not act shortly, it will fuel speculations that rates will soon be increased. This should support the value of the euro, contracting exports and putting prices under a renewed downside pressure.

Seasonal and technical components appear to anticipate an increase of the March US dollar index toward 81.60/82.30 by mid-year.

 

Back to homepage

Leave a comment

Leave a comment