Published On: Thu, Mar 2nd, 2017

Looking at the dollar after job data and with the Fed in mind



The dollar has extended its gains during Thursday trading after the Initial jobless claims fell to 223,000 in the latest week. This is their lowest level since 1973.

The dollar had earlier moved higher as Fed members dropped more hints of a possible March rate hike and systems that measure the prospects of a rate hike are pricing a move on March 15 at 73%, up from 69% last week.

The expectations for the March move now look to have caught up with the economic data and the behaviour of the market. One has to think that if the Fed is to book three rate hikes this year then it is essential to get going quickly or risk being too far behind the curve.

Certainly, when measuring the level of the dollar index spot less the 50-day moving average that does appear to be a solid track record of finding a floor at the level of -2.00 or -3.00. This looks to be the case at the current time.

Source:, Spotlight Ideas

On Tuesday, February 28, there was a two-pronged attack from the talking heads of the Fed as San Francisco Fed President John Williams and New York Fed President William Dudley were championing the urgency to tighten.

Williams suggested that Fed policy makers are to give “serious consideration” to a rate boost on March 14-15, adding he doesn’t see a need to delay the next move.

In turn, Dudley said the case for tightening “has become a lot more compelling.”

Dollar Index 5-Year Chart

Source: Spotlight Ideas

Management and risk

Parameters Dollar Index June 2017 DXM7

Entry: Buy 102.09  (15:16 GMT)

Targets:102.27 … 102.40 … 102.72 … 103.25


Time horizon:Medium-Term

— Edited by Clemens Bomsdorf

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