The dollar saw little movement during James Bullard’s and Minneapolis fed President Neel Kashkari’s comments yesterday on the future path of monetary policy. Bullard who is not a voting member of the FOMC this year gave a dovish tone however the dollar did maintain its gains from Friday.
The dollar bulls will be hoping the positive employment data released late last week will trickle into the inflation data released on Friday the 11th which would encourage further tightening of policy. Bullard in his comments did however outline that the target range should remain unchanged as a tightening labour force is not likely to spill into inflation data.
Investors should be aware that the policy of normalisation has continued despite low inflation, this hawkish sentiment appears to be the common theme amongst the major central banks. It’s plausible that if inflation data comes in as expected then the December meeting is a live one. Fed Futures which is a predictor of future interest rates is predicting a less than 50% likelihood of another rate hikes this year.
This could perhaps cause more volatility in the dollar as a rate hike is not priced into the dollar, in coming data is therefore ever more important. Job opening data released later today will give an indication of how the labour market is performing, a stronger than expected reading would be bullish for the dollar and vice versa.
The Australian dollar may see movement today as the Reserves bank of Australia assistant governor Kent speaks. The Reserve bank of Australia have been acting dovish recently due to the fear of a strengthening Australian dollar, as stated yesterday the Economic calendar is rather weak therefore perhaps Governor Kent will have the ears of not only forex traders.
By Ian Kelly – Market Analyst, Avatrade
