Dollar Weekly Overview 19 MAR - 23 MAR

The dollar was heading north in pre-trading US session hours on Monday, with all attention shifting to the next monetary policy meeting of the Federal Reserve scheduled this week.

The US dollar index, which measures the greenback against six major currencies, was trading 0.09 percent lower at 89.88 by the time of this writing.

Market participants are currently looking ahead to the next policy announcement on March 21, with a vast majority of bets on a 25 basis points rate hike. That move would leave the benchmark in a range between 1.50 percent and 1.75 percent.

According to Fed funds CME Group’s FedWatch program, market players are currently pricing in a nearly 94 percent chance of a rate adjustment next week. It would be the first hike of 2018.

A rising interest rate environment is positive for the American currency as more investors feel attracted to put their money into the US economy, reducing demand for safe-haven currencies.

On the data front, the consumer price index for February matched expectations for a 0.2 percent build. The core CPI also came at a month rate of 0.2 percent and a year-over-year reading of 1.8 percent. The US Commerce Department said retail sales dropped 0.1 percent in February, against a forecasted 0.3 percent build.

Last week, the USD pairs closed mainly flat as the American currency came under pressure on increasing uncertainty surrounding the Trump administration.

President Donald Trump fired Secretary of State Rex Tillerson last week as both failed to find common ground on Iran’s nuclear deal. Trump selected Mike Pompeo as a replacement.

“Mike Pompeo, Director of the CIA, will become our new Secretary of State. He will do a fantastic job! Thank you to Rex Tillerson for his service! Gina Haspel will become the new Director of the CIA, and the first woman so chosen. Congratulations to all!” tweeted on Mar, 13.

Washington’s political drama will likely remain on the spotlight this week, opening the doors to potential changes on the dollar’s dynamic for the next few days.

Investors will also be looking at the G20 meeting in Argentina. Finance minister and central bank leaders from the world’s 20 top economies will be attending the meeting on Monday.

FortFS