Trump does not like the Fed's policy

When Donald Trump does not like something, he does not bother to share it. Even if this can have consequences on financial markets. Last week, the US president criticized the Fed's policy.
According to the president, every time when Us economy goes up, FED wants to raise rates. And Trump's really not happy about this.
And Trump's comments have led to a certain decline in the dollar against other major currencies on Thursday.
The yuan has been distinguished from the depreciation of the dollar. The Chinese currency has fallen to over one year's bottom.
Investors continue to worry about the decline of the yuan against the US dollar. The Chinese currency reached 6.8106 yuan per dollar, with the psychological limit of 6.8 being exceeded for the first time in more than a year.
China Central Bank announced a rate of 6.7671 yuan before opening the market on Friday, which was the lowest level in a year.
According to analysts, Trump's remarks can trigger investors who think buying dollars to postpone their deals.
Trump's comment on Thursday is not the first in which the president expresses dissatisfaction with the strong dollar. Earlier, in interview with Wall Street Journal Trump had said even more openly that the dollar was "too strong".

More new jobs and higher unemployment in the United States

The newly created jobs in the United States surprised the analysts happily, rising to 213,000 in the past month, or more than the average expectations of 200,000 new jobs.
What disappointed investors, however, was the unemployment figures. Instead of keeping at 3.8%, as expected, unemployment rose to 4%.
The other disappointing figures in the report were those of raising average hourly wages. The index grew by 0.2% on a monthly basis and 2.7% on an annual basis in June, against expectations of an increase of 0.3 and 2.8%, respectively.
All this has made investors take a step backwards in terms of forecasts of four US interest rates hikes this year after we've seen two. In other words, they can only expect another increase in interest rates this year.
The dollar has fallen sharply against other major currencies. The euro rose to 1.1750 levels after trading at levels of about 1.1700 previously.

How to deal the dollar next few days?

Discrepancies in the monetary policy of the Fed and the ECB are likely to lead to an increase in the dollar exchange rate and a decrease in the euro next week, making the dollar more attractive to profit-seeking investors.
On Wednesday the "three bigs" - Kuroda, Draghi and Powel will perform in Portugal and would shake the markets with some volatility, bringing to table good trading options.
On Thursday the Bank of England will keep the interest rate unchanged. The decision of the National Bank of Switzerland will be similar.
The US dollar index fell 0.14% at the end of the trading session on Friday to 94.80, after rising to a maximum in eleven months, to 95.13. Over the last week, the dollar index rose 1.33%, which was the largest growth in seven weeks.
More likely, the dollar will keep the good pace next week.

Dollar should not yet waiting for pleasant surprises from the Fed

After an impressive rally, the dollar shows a local correction against the major currencies. The euphoria of the bulls over the yield growth of the bonds faded - the yield indicator of 10-year securities has moved away from the highs of four years ago, although it is held near the 3% mark, keeping the American currency from a more significant drawdown.
In the wake of the rally in profitability, the expectations of four Fed rate increases this year instead of three were returned to the scene. Next week, the Fed will hold a meeting, but changes in monetary policy are not expected this time. The danger for the dollar in the context of this event is that recently the market's belief in more active policy tightening has significantly strengthened. Accordingly, players will expect more aggressive rhetoric from the regulator.
However, the Central Bank can still take a wait-and-see attitude and refrain from premature "hawkish" signals, so as not to run ahead. Moreover, the situation in foreign policy is not at all smooth, and, given Trump's unpredictability, new conflicts can await ahead.
However, at this stage, the chances for a peaceful resolution of trade contradictions with China are growing. China today urged Washington not to aggravate their trade relations. Next week, US Treasury Secretary Stephen Mnuchin and several other White House officials will travel to China to negotiate trade. If there are encouraging statements from this front, this will support both interest in risk and the dollar.

Gold is down

Quotes of gold were down on the trading session on Wednesday, reached a new local maximum at around $1318.75, after which they recovered to the level of $1323 per troy ounce by the end of the day. Strengthening of the US dollar against most other assets was the main reason for the decline in gold. However, quotes are still traded in the range 1300 - 1350, and any attempts to go beyond the corridor quickly fail.
Reduction of the price of gold within the range is also connected with the fall of geopolitical tension without the development of the conflict between the US, Syria and Russia, and also thanks to the statements of Donald Trump about possible agreements with China to end the trade war.
In my forecast for today I expect a further decline in gold quotations to support levels of 1320, 1318 and 1315 dollars per troy ounce.

W. Dudley: Gradual rising interest rates by the Fed

Fed chief William Dudley said the federal reserve will likely continue to stick to its plan for a gradual rise in interest rates unless inflation rises to an unexpected margin.
The official does not think we know how much interest increases we will see this year, Dudley said on Monday in an interview with CNBC. While inflation is relatively low, the Fed will raise interest rates smoothly. If the inflation rate rises above 2%, then the smooth rise in interest rates can be changed, according to Dudley.
During the Fed meeting in March, the Fed officials voted for three or four interest rises this year, including the meeting of the reserve that went on and the interest rate was raised.
According to Dudley, three or four interest rises seem like a reasonable decision for this year.
Dudley is expected to retire as head of the Fed in New York after more than nine years on that post. He will be succeeded by John Williams, currently head of the Fed San Francisco.

Experts: Poor April and further weakness for the dollar

The US currency rose this week, neutralizing its loss from the past. This, however, does not mean that the dollar's growth has resumed, according to market participants.
The dollar index added 0.6% this week, despite its weakness on Thursday.
The dollar rises to a one-month high against the Japanese yen on Wednesday and a two-month high against the Swiss franc. Green money recorded substantial losses against the two currencies that have been seen as rescue in recent weeks.
However, the rise in the dollar is largely determined by end-of-month and quarter-month factors, market observers said.
Indeed, the dollar index has risen in each of the weeks of March, except for one. US deficit concerns remain on the agenda as well as potential trade wars that offset the positive impact of expectations of interest rates on the Fed.
And while at the end of each month, some rebalancing is observed in investors' portfolios, March is a bit more special when it comes to far more serious capital flows. Otherwise, fundamentally nothing has changed for the dollar.
April is traditionally a weak month for the dollar, from a historical point of view. Last April, the dollar index lost 0.9% and in the previous two years the loss for the index was 2.2%, recall from Scotiabank.

Draghi pushed the dollar up, dragged the gold down

Gold has fallen, and the dollar has risen since its three-week minimum against the euro after ECB chief Mario Draghi signaled that any normalization of monetary policy would be very "smooth" and "gradual".
The single currency recorded a significant decline over all major currencies, following Draggy's comments.
Draghi also said that inflation is still weak, which is likely to predict a slight change in ECB policy.
The spot price of gold fell 0.3 percent to $ 1 321.09 per ounce. It reached a one-week high of $ 1,340.42 an ounce on Wednesday before closing 0.6% down. Gold futures fell 0.4 percent to $ 1,321.80.
According to Georgette Boyle, an analyst at ABN Amro, the dollar will remain a key driver of the gold price. The only reason the gold price rose to $ 1,340 per ounce was the weakness of the US currency last week, the analyst said.

The gold with the biggest loss last week since the beginning of the year

Gold fell on Friday, focusing on its biggest weekly decline since the beginning of the year, following the rise in the dollar. The US currency rose from its three-year low two weeks ago as a result of higher interest rates on US government bonds.
The spot price of gold fell 0.1% to 1 330.5 dollars per ounce, which was its fifth consecutive losing session of six sessions. The precious metal futures are traded without substantial change at a level of $ 1,332.90 per ounce.
The spot price lost 1.4% of its value this week, or the biggest weekly decline since early December. This happened after the failed resistance break at $1,360 per ounce.
Stock market volatility rose substantially this month, largely contributing to the appreciation of the metal. However, expectations for higher inflation and three interest rises, respectively, had a negative impact on gold and supported the US dollar.
On the physical market, gold purchases were weak after the Chinese New Year passed, commented more market observers.

What is the reason for the dollar's depreciation?

In the shadow of the meteoric growth of US indices this year, the dollar declines faster and more than many analysts have predicted.
The dollar lost nearly 10 percent in the past year, which was its worst performance compared to other major currencies since 2003. Instead of changing its trend, however, in a state of growth in the US economy and a rise in interest rates, the dollar continued to decline in the new year 2018.
The decline in the dollar happened not only at a time of new record growth in US indices, but also in an environment of rising interest rates on 10-year bonds to their highest level in three years.
At the same time, interest on short-term loans rose to its highest levels since 2008. All of this should support a strong dollar. Instead, however, we are witnessing a continuing decline for "green money".
According to some experts, the tax incentives are the reason for this. While they are extremely good for stock markets, the rise in the US deficit increases interest rates on government bonds, and leads to the sale of debt securities.
The repatriation of capital by US companies, back to the United States, has triggered a depreciation of the dollar.
The rise in the US deficit has led the country to finance it with loans from other nations. This reduces the value of the dollar.

The dollar is the cheapest against the euro since September 25th

The US dollar declined to its lowest level since September 25 against the euro, registering a third consecutive weekly loss.
Concerns that the Fed may not respond to the increased market expectations in terms of the numbers of increases in interest rates have largely determined the depreciation of the US currency.
The US continues to face the dangers of low inflation, even though it operates in full employment.
The dollar index fell 0.39%, reaching the lowest value in two months, at 92.781 points. The index was down 0.9% in the past week.
The euro appreciated by 0.7% at the end of last week, reaching a level of 1.1927 dollars, compared to 1.1850 Thursday. This was the first breach of 1.19 by the end of September. The euro appreciated 1.1% last week.

J. Gundlach: The dollar will fall in the long run

DoubleLine Capital CEO - Jeffrey Gundlach, talks about the situation in the most popular currency pair - EUR / USD in an interview with CNBC Financial.
First, we should note that at the beginning of the year all experts were extremely optimistic about the dollar. In fact, long dollar positions were among the most crowded deals in the market, Gundlach commented.
The dramatic depreciation of the dollar against the euro followed. We have to look at the factors that predetermined this. And that was mainly the expectations of investors for the Fed's policy.
Fed's comments on three interest rate rises in the market next year are not "bought from the market" for bonds, Gundlach commented. In fact, only 50% of market participants expect an increase in interest rates next year. And as I have not once seen, in my long-standing practice, the market has been much more predictive in history than the Fed.
Moreover, as far as possible, I expect the Fed to change its tone over time and in case of bad data, as well as its expectations for the number of interest rises in the next year. It is these expectations that make the dollar cheaper than other major currencies.
Otherwise, with regard to the recent appreciation of the dollar, it is not surprising. Indeed, in August, we witnessed its biggest daily decline in 20 years. And this, logically, puts it in a situation of "oversold", which many counter-investors have taken advantage of.
Otherwise, in general, I expect, despite the momentum of the dollar, that its depreciation in the longer term will continue, Gundlach predicted.

The pound with four-week low against the dollar

The pound fell to its lowest value of nearly four weeks against the dollar after speculation about a coup against Theresa Mey from her own party after her terrible speech on Wednesday.
The British currency has fallen against the ten major currencies, with demand for dollars being exacerbated. This has triggered stops in leveraged accounts, commented market experts.
According to British newspaper Telegraph, over 30 senior members of the party of May, prepare a petition for resignation.
The pound lost 0.9% against the greenback from 1.3134 to levels approaching test support at 55-day moving average. The pound fell further with 0.5% against the euro to 89.24 pence.

Why the dollar will rise? (3)

This is in an environment of expected normalization of the interest rate policy of other central banks around the world. At its meeting on Thursday, the British Central Bank hinted at a very recent rise in interest rates. The ECB is also expected to do so at its next meeting in October. As we all know, expectations are traded on the financial markets.
The point is that a weak dollar is likely to start generating an accelerated rise in US inflation. And this will cause investors to start expecting the Fed to continue raising interest rates.
Finally, investor expectations are overestimated against the US dollar. According to 44% of market participants, the dollar will continue to fall cheaper. And this is one of the most serious indicators that the dollar may rise.

Why the dollar will rise? (2)

For most of last year, the dollar and raw materials were moving in the same direction. This means that the dollar was weakening, but raw materials were cheaper. An example is the sharp oil depreciation.
In fact, the US currency is weak compared to the rest of the world. Compared to the euro, the dollar has fallen by 14% since the beginning of the year. 9.8% against the Canadian dollar, 8.1% against the British pound and 16% against the Japanese yen.
So it can be stated that something is happening in the US, which makes the dollar weaken.
And the answer to the question - what makes the dollar cheaper is simple. Fed interest policy.
Although the Fed raised its interest rates twice this year, against the background of its twofold increase over the previous two years, the reserve is expected to be much less aggressive in the future.

Why the dollar will rise? (1)

Is the weakness of the dollar for the Fed a problem? Under given conditions, the weaker currency should initiate inflationary pressure as foreign goods become more expensive in local markets. In practice, local currency can no longer buy so many foreign goods.
The question is - is the dollar weaker, or the other currencies become stronger?
Currency analyzes are always "slippery" due to the fact that there are two sides to the equation. The dollar is weaker than the euro, but the question is which of the two sides would prevail - whether the weakness of the dollar or the strength of the euro?
A simpler way to answer this question we'll find looking at a basket of other currencies.

ANZ: The bearish attitudes to the dollar are overexposed

The US dollar received a serious "slap" this year, with the dollar index down by 9% since the beginning of the year. Not all analysts, however, are so negative towards the dollar.
The political uncertainty surrounding the Trump administration is cited by ANZ analysts as the main reason for the "excessive depreciation of the dollar" over other major currencies.
Leverage funds currently have a net short position in the dollar, which has taken the levels of "green money" far beyond the foundation, analysts said.
The weakness of the underlying reserve currency became a reality, despite the rise in Fed's interest rates, which outstripped other central banks around the world. In addition, the Fed's balance sheet is expected to start shrinking relatively soon, which will be another factor that will work to support the US dollar.

The dollar went up after the release of the US employment report

On Friday, the dollar moved up against other major currencies after a positive employment report allowed investors to forget about the continuing political tension in Washington.
On Friday, the US Department of Labor released a report on employment outside the agricultural sector, according to which 209,000 jobs were created in the US, which significantly exceeded the forecasts of experts of 183,000 jobs. The adjusted value showed that 231 thousand jobs were created in the US economy in June (the preliminary value was 222 thousand jobs).
After the value of 4.4% the unemployment rate in July fell to 4.3%, according to forecasts after a value of 4.4% in the previous month.
The average hourly wage in the US increased by 0.3% in line with the forecast and against an increase of 0.2% a month earlier.

EUR/USD may fall to 1.04, and GBP/USD - to 1.20

The euro has risen to levels close to the psychological limit of 1.1500, but not all experts are convinced of further growth for the single currency.
The US dollar seems ready to shake off losses after Donald Trump's election victory, according to Amherst Pierpont.
The weak dollar may be ready to make a "U-turn" now that there are confirmations of interest rates rise.
Since the beginning of the year, the dollar has fallen by 8% against the euro and by 13% against the Mexican peso.
Analysts say, however, investors are starting to look beyond Washington for support for green money. The US currency should follow interest rates on government bonds that have risen.
In addition, the Fed is expected to begin to reduce its balance sheet, which in itself will cause a further rise in short-term interest rates and, accordingly, should make the dollar more expensive.
According to Amherst Pierpont's strategists, from now on we will see a return to the dollar-positive environment. They expect the dollar to rise by between 3 and 4% in general, the euro to move to 1.04 against the dollar and the pound to 1.20.

The dollar is cheaper after the Fed's minutes

The dollar dropped after the Fed meeting of the previous session yesterday.
It makes it clear that the members of the Monetary Policy Committee have agreed to refrain from more aggressive interest-rate action until it becomes clear that the observed slowdown in the US economy has been a temporary phenomenon.
Analysts believe the Fed's statements confirm the thesis of most market participants that we will probably see no more than two interest rises this year.
The euro appreciated against the dollar and traded at levels of 1.1236 early this morning. Later, the single currency reached the highest values ​​of about 1.1250.
The pound also rose against the dollar, again trying to get back above the psychological limit of 1.3000 against the dollar.