Strong figures will boost expectations of higher growth in consumer spending in the U.S. That will heighten expectations of at least two more rate hikes from the Fed, supporting the dollar.
Yuji Saito
Some investors will use strong consumer confidence data as an reason to buy the dollar. Any number above 100 is likely be dollar supportive.
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Japanese investors are still looking for higher yields overseas. That's weighing on the yen.
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The market focus is surely on the interest-rate differentials between the U.S. And other major economies, including Japan. The Bank of Japan won't raise its interest rate any time soon, so the yen will remain the most bearish for the foreseeable future, while the dollar will be the most bullish.
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Strong jobs data will certainly further raise expectations for Fed rate hikes in March and the months after that. The U.S. Economy still seems robust and the dollar's upward trend is likely to continue.
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The dollar remains firm, as the absolute U.S. Interest- rate advantage still continues to exist. Rates hikes by the BOJ are a long way off.
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With the huge amount of money that Japanese sent abroad, repatriation flows could have a major effect on the dollar-yen through March.
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Investors will become focused on the interest-rate differential story this week. Strong U.S. Economic figures will reinforce the view the Fed will keep raising rates, giving a boost to the dollar.
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