The rise of the US dollar continued last week as markets appeared to turn the corner after the disappointing non-farm payrolls. While there were no major data releases on Friday there were some key comments on the newswires. Federal Reserve voting member Eric Rosengren, speaking at breakfast event, said that he sees risks in the Federal Reserve waiting too long to increase interest rates. The US dollar strengthened significantly on the back of this comment as anything surrounding future policy action is being monitored closely.
US dollar strength could continue should we see the trend of improving US economic data roll into the week ahead. The key economic readings are grouped towards the end of the week. On Thursday the key economic readings set for release are the retail sales, jobless claims and Empire manufacturing. The core reading (excluding autos) on sales is expected to rebound from last month’s negative reading. On Friday, the key inflation reading and consumer sentiment dominate. Inflation is expected to tick higher and consumer sentiment is due to improve. If this proves to be the case then the following weeks Federal Reserve meeting and press conference will be set up nicely. The majority of price action has been and will continue to be driven by sentiment surrounding the potential of a rate hike by the end of 2016. If the data improves this week the case will only be strengthened.
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