US Dollar: forecast for June 22-28

Kira Iukhtenko

The last week’s Federal Reserve meeting lowered the overall demand for the US dollar. As we expected, the US central bank refused to increase the Fed’s fund rate. What’s more, the 2015 economic forecasts were revised to the downside.

However, the Fed still expects two rate hikes in the year 2015. In our view, this is enough to confirm the hawkish stance of the regulator. You should also pay attention to the fact that the 10-year Treasury yields extended the upside over the past week. For now, the currency market growth lags.

Fresh economic data from the US remains quite bullish for the greenback. For instance, US CPI rose by 0.4% in May – this was the best reading in two years. The global market reaction on the Fed’s meeting seems to be a little bit overblown. Look to buy the US currency on dips versus the euro, yen, Aussie and kiwi dollars.

On the new week, we’ll be watching core durable goods orders, manufacturing PMI and personal consumption data. What’s more, don’t miss the final Q1 GDP. According to the preliminary estimate, the US economy contracted by 0.7% over the first quarter. 

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