Quick catch up on the USD
The Fed are currently on hold now and the recent dot plot suggests that there will be no policy changes in 2020.
In order to consider a rise in rates they will need to see a supported uptick in inflation. Keep an eye out for inflation data out on Tuesday this week. The current expectations for the next Fed meeting is that there is seen a 90% probability of no rate change.
The general market picture is that there is a 50% chance that the Fed cuts rates by 25bps in the next 12 months. On Friday there was a US payroll miss in both the headline and wage prints. However, the Dollar Index had still made a pretty decent recovery over the week on the improved non-manufacturing PMI and ADP prints in the week. Furthermore, the de-escalation of the Iranian situation benefitted the USD against the safe haven CHF and JPY. The Dollar Index was up last week, but contained underneath two key daily resistance levels. It will need to break above these to keep its momentum going from last week.
This week the signing of the US-China phase 1 deal will be the next round of geo-political risk for the USD and decide its near term direction.
