Dollar Struggling To Find Follow Through Buying
ActionForex | Nov 16, 2016 04:06AM ET
While the greenback remains firm, the dollar index is struggling around 100 handle on lack of follow through buying. Boston Fed president Eric Rosengren, a known dove affirmed that "the market's assessment of the likelihood of tightening in December seems plausible" in absence of "significant negative economic news". He expected inflation to reach 2% target next year. But he maintained his preference for "gradual tightening" to avoid disruption of the economy "attaining" the inflation and employment targets. Fed governor Daniel Tarullo also urged to be "cautious" in moving forward with interest rate. And he emphasized that "we obviously don't want to be pushing on the brakes harder than we need to in order to continue the trend of moderate growth." As of yesterday, fed fund futures are pricing in 90.6% chance of a December hike and roughly 45% chance of another hike by next June.
In Eurozone, ECB executive board member Sabine Lautenschlaeger said that the central bank is discussing with banks to move some operations from London to the Eurozone. In particular, banks were looking at the different between Eurozone's regulatory method and the BoE's Prudential (LON:PRU) Regulation Authority and be preparing themselves. ECB governing council member Francois Villeroy de Galhau said that the central bank is "making progress" towards the inflation target and much "remain attentive to economic and financial developments.
In UK, BoE Mark Carney commented on the lower than expected inflation reading released yesterday. Headline CPI slowed to 0.9% yoy in October, below prior 1.0% yoy and missed expectation of 1.1% yoy. He maintained his view that inflation is "going to go up" as the "consequence of a very large move in the exchange rate". But he maintained recent neutral stance of the BoE on interest rate. Meanwhile, he also told the parliament that he would not consider extending his time as BoE and governor and he "will leave June 30, 2019".
On the data front, Australia leading index rose 0.1% mom in October, wage cost index rose 0.4% qoq in Q3. UK employment data and Swiss ZEW will be the main focus in European session. US will release PPI, industrial production and NAHB housing market index later in the day.
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