US Dollar awaits the next week’s Fed
The past week has become very successful for the US currency with the US dollar index breaking above 100 points for the first time since 2003. Demand for the greenback was pushed up by the increased expectations of the Fed’s rate hike in mid-2015.
On the new week the US economic calendar is full of important releases, but the most important event is the Fed’s policy meeting on March 17-18. There is a high chance that the Fed excludes its pledge to stay “patient” in monetary policy from its forward guidance. If it happens, FOMC will theoretically open the way for a rate hike in June. The US dollar will stay in demand ahead of the meeting.
The US labor market data supports the hawkish expectations, but price growth remains weak. US consumer prices have never reached the Fed’s target of 2% over the past 3 years, while in 2015 monthly CPI turned negative. We’ll see how the Fed appraises the current economic conditions: it will also release renewed projections on Wednesday.