Weekly USD Outlook: Powell’s Message Is Worth Noting

WikiFX News (15 June) - S&P 500s steep fall of 6% within one day last week gave the market risk warnings. Such a swift and sudden fluctuation usually benefits dollar as a global reserve currency, but on the other hand, demand for dollar may reduce if market volatility further declines.

As for the fundamentals, US Retail Sales data will be released on Tuesday. Market expect a 7.4% Retail Sales Monthly Rate in May, and the improvement of consumption can boost Dow Jones and S&P 500. These factors will weigh on greenback, leading to inferior performance of USD against growth-related currencies such as AUD and NZD.

Meanwhile, investors also need to pay close attention to the speeches of Fed‘s policy makers, including Fed’s Chair Jerome Powell. He is expected to reiterate his concerns over economic prospect which he already mentioned last week.

The Fed‘s balance sheet saw little changes last week, which can increase the market’s demand for greater liquidity. If the present economic situation is not substantially improved, the US dollar will have less room to decline further.

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