In the last year, the green bucks have suffered an extensive loss in the global market and all of its major rivals rallied hard from the ground. However, during the last part of the year 2016, the green bucks have gained extensive strength in the global market and pushed all of its major rivals down to the ground. The dollar bulls gained their first fuel after the U.S presidential election as Mr. Trump stated that they are going to increase their fiscal spending in the market. He also stated that they are going to waive the tax of the US citizen to a great extent from the very beginning of the year 2017.This created an extreme level of positive sentiment among the U.S consumers and it pushed the dollar higher in the global market. The last two-month economic performance was extremely great and the dollar gained its strongest momentum in the last couple of two months. Before that event, the dollar index was sliding downward in the global market and all its major rivals were rallying hard due to the ongoing weakness of the green bucks. But things greatly changed for the green bucks in the last couple of months.
Projected three rate hike by the FED: The long anticipated rate hike was implemented by the FED in their last FOMC meeting as the FED raised their interest rate on the basis of 25 points. After the FED hiked their interest rate in the global market. The US dollar index gained its strongest bullish momentum and secured a record high level, the level which has not been touch for the last 14 years. The U.S dollar index is the measure of the overall strength of the green bucks against the major six rival currency pairs in the world. FED chairperson Janet Yellen has stated in their last FOMC meeting minute that they are going to hike their interest rate in the year 2017 for three times and investors world have taken this statement very seriously. If the FED manages to go for three rate hike in this year then the dollar will become extremely strong in the global market. Most importantly the central bank of the U.S will also pressurize the FED for at least two rate hike before the month of November. So we are expecting at least two rate hike this year and this will create a strong U.S dollar in the global market which will ultimately push all of its major rivals to significantly low level.
Market sentiment: There has been a little confusion about the ongoing strength of the U.S dollar during the last trading week of the year 2016.Most of the leading investors were thinking that the green bucks will lose its strength in the very beginning of the year 2017 since the market absorbed lots of intensive heat from the green bucks before the new year starting. Most immortally due to the recent slip of the U.S dollar index from its 14 years high in the market intensified the bearish sentiment of the green bucks. But things have turned out extremely positive in the first trading week for the green bucks. Most importantly the average hourly income of the U.S citizen has been increased by 0.4 % according to the Friday data release. Such a promising performance from the U.S economy has now created a doubt in the investor’s mind that the dollar is still holding the ground firmly and any time it might surge higher in them market. All the major rivals suffered an extensive loss on the last Friday prior to week closing and the week ended with bullish tone for the green bucks.
Effect on commodity market: The price of yellow metal started its bullish momentum in the market after hitting the critical support level at 1122.27 level in the market. In the last week it continued its bullish momentum but on the last trading day, it sharply fell to the ground as the average hourly income rose by 0.4 percent. The price of silver also dropped in the global economy along with the price of gold. The mighty dollar gained 1.44% against the low-yielding Japanese Yen and traded aroung 117.00 level in the market. On the other hand, the EURUSD pair fell more than 80 pips in the market and closed at 1.05310 level. The GBPUSD pair was showing nice sign of bullish recovery in the global market and most of the investors were thinking that the price will break the critical resistance level at 1.24352.But due to the intensive strength of the green bucks its sharply dropped in the forex market and traded at 1.22820 prior to the week closing. To be precise the dollar exhibits its strength both in the commodity market and forex market in the last trading day and most importantly it created an imminent threat to the precious metal market.
Summary: The year 2017 has been favoring the green bucks as the dollar ended its first trading week of the New Year with a positive tone in the market. Most of the traders are now thinking that the dollar will be strengthened more in the near future as the possibility of a rate hike is increasing every single day. The last week economic data release has also given the FED a stronger platform to raise their current interest rate. In the upcoming week, the dollar will start its trading day with a strong bullish tone in the market and most of the professional traders are expecting a bullish run from the green bucks in near future.