Author: Dmitriy Gurkovskiy, Chief Analyst at RoboForex
Despite being pretty clear and logical, talks about the benchmark key rate increase in the USA in December are “haunting” some monetary politicians and investors. These doubts, which were mentioned in Patrick Harker’s comments below, put pressure upon the “sensitive” USD.
Not long time ago, the FOMC member Patrick Harker said that one should be very careful when estimating the USA inflation and the Federal Reserve had to be ready for any stresses and shocks in the economy. Nevertheless, Harker said he would support the key rate increase next month, although he thought that the necessity in the rate hike had been decreasing recently.
He’s not the first American monetary politician to say that inflation risks may be a reason to postpone the key rate hike. In September 2017, the CPI in the USA expanded up to 2.2% y/y and by 0.5% m/m. The last time the indicator improved in the similar way was in January. Between January and September, the inflation growth varied from 0.09% m/m (May and June) to 0.30% m/m. There was even the deflation in July, when the CPI lost 0.07% m/m.
One should admit that the indicator is rather unstable. However, the Fed’s target is at 2% and from this point of view, the index is doing well. “Mood swings” relating to the key rate increase will affect the US Dollar until the regulator’s meeting scheduled for December is over.
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The USD perspectives are better seen at the EUR/USD pair chart. From the technical point of view, the downtrend continues. The pair is trading to test the upside border of the current channel and, as a result, may break it and move beyond 1.1690. The uptrend may continue if the price reaches 1.1840, which is the upside border of the projected channel.
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex bears no responsibility for trading results based on trading recommendations described in these analytical reviews.