USD Stands Tall For the Fourth Year in a Row

The Greenback recovered from a two-week decline vs. a basket of major currencies as many markets were closed for the New Year holiday. The U.S. dollar had climbed to 14-year highs last December, as markets anticipate that the U.S. Fed could hike rates three times this year. On the other hand, USD could touch new highs, as Trump could fuel growth with a programme of fiscal expansion.

The Greenback finished 2016 with an almost 4% annual rise, for the fourth year in a row.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down by 1% at the end of last week, due to liquidation of contracts and financial positions.  The index touched 102.40 before recovering during today’s trading session.

The yellow metal settled at $1,150 as gains from a weak USD were negatively affected by profit-taking at the end of 2016 to finish three years of bearish patterns.

Gold jumped last year on “Brexit” news and has touched its highest level in two years in July 2016. Technically, the yellow metal could fluctuate during the next period, in anticipation of the new U.S. administration. 

U.S. Crude prices rose as much as 50% last year, an annual record high since 2009. U.S. crude is trading at $54, as the market is focusing on the implementation and impact of OPEC's first output cuts since 2008. On the other hand, oil prices could face many challenges, such as strong USD and shale oil production.

The most important economic events:

  • EUR German Unemployment Change (DEC): (GMT 10:55) - Important – Forecast (-5k) – Previous (-5k).
  • EUR German Unemployment Rate s.a. (DEC): (GMT 10:55) - Important – Forecast (6.0%) – Previous (6.0%).
  • EUR German Consumer Price Index (YoY) (DEC P): (GMT 10:55) - Important – Forecast (1.4%) – Previous (0.8%).
  • USD ISM Manufacturing (DEC): (GMT 10:55) - Important – Forecast (53.7) – Previous (53.2).

The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM Capital Limited. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.

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