Dollar eased off but eyes on upcoming Fed meeting | Another clash between Greece and Germany
The dollar has eased off against major currencies as traders want to enjoy some fruit of their labour. However, this does not mean that the trend for the dollar has changed or weakened, no not all, the US retail sales data have just caused some head scratches yesterday, because the general consensus was that the falling oil prices should kick some extra spending. Although, the reality was far from this forecast, and you can mostly blame this due to the poor weather conditions in the US. It is difficult to think of a scenario that the consumers will not spend especially, when the falling oil price increases their purchasing power, and at the same time, you not only have more people working, but we also have an evidence of an uptick in the wage growth. A lethal combination of increase in the consumer spending.
All eyes are focused towards the upcoming fed policy meeting next week and that will be the key focus going forward. Given that the job market is robust and we also have increased in the wage growth, which is helping the slack in the economy, the most important english language word among traders will be “patent”. If the Fed are really serious to increase the interest rate during the month of June then the probabilities are very high that this word may be removed from their statement and this will be perceived as a very strong buy signal for the currency.
However, you may be caught on the wrong side of the market if you just position yourself based on this that the Fed have removed the word patient from their language from their statement and now during the next meeting they will increase the rate. No, not all, it is important to remember that we are facing a world of divergence when it comes to monetary policy around the world so the fed may take their time even after removing the word patient from their language. This is the reality which investors should certainly prepare themselves.
Back in Europe, the war of words has picked up more fuel between Greece and Germany who till this day have not learned to not to push each others button and resolve the matter on hand with minimum collateral. The greek finance minister was not feeling pleasant about the comment by the German finance minister, the fact is, it does not matter who feels better or who is not, we have a serious issue, which is to pull Greeks out of their misery and if both sides kept on overlooking this issue, we have a serious problem in the eurozone.