US Dollar Plunges Before Widely Expected Fed Outcome
Apr, 26th 14:12
The dollar has been down today due to expectations that The Fed will keep its interest rate unchanged at the policy meeting starting today. One of the factors that The Fed will focus on is the sluggishness of the labor market to estimate how much the economy needs to grow without triggering inflation.
The US dollar index, which measures the strength of the currency against a basket of currencies was at 94.579, down 0.21% from the early session levels of around 94.767.
The number of US workers without a diploma/degree has gained 46.2% in the six months to March. Whereas, the number of those who have college degrees has remained unchanged. This may be a sign that the US economy is still recovering from the recession.
Crude futures gained on Tuesday on the back of a weaker dollar, and hopes for a reduction in the global oil glut. However, the rally was curbed by concerns over the intensifying battle for market share between two large oil producers – Saudi Arabia and Iran. Brent crude was trading at $44.75 per barrel, up 0.83% compared with the opening price.
The market is awaiting the speech from Bank of Canada (BOC) Governor Stephen Poloz at the Canada-US Securities Summit today, for more information regarding future monetary policy. The Canadian dollar is expected to witness volatility during the speech as traders try to infer interest rate hints in the speech.
Fig. USDCAD H4 Technical Chart
The US dollar has been falling continuously against its Canadian dollar counterpart from 1.48891, the highest level for the USDCAD in more than 3 months. The DI- (green line) seems to be moving away from DI+ (red line), signaling that the selling trend is continuing with increasing strength. With RSI hovering around 30 and heading down, the pair is expected to plummet into the oversold zone soon.
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