USD Monthly Review September 2018

President Trump pronounced himself “less than thrilled” with recent monetary policy decisions by the FOMC despite being instigator of the policies that required the Fed to hike.

In Jackson Hole, Fed Chairman announced that the time has come for a more reactive Fed. This was what was expected of him when he was elected and should lead to more transparency.

The U.S trade deficit grew by 6.3% MoM in July, raising the possibility of further tariffs on U.S. imports.

The “goldilocks” scenario which led to 4.2% growth in Q2 is fading with growth likely to be nearer 3% in Q3 with the outcome that the dollar may correct further.

Despite Trump not “feeling it” the FOMC looks likely to hike rates again at its late September meeting, prior to an expected fall in growth that will keep rates on hold for a while thereafter.

Trade talks between China and the U.S. yielded no progress so a further round of futile tariffs is likely, leading to tit-for-tat measures from Beijing.

Following guilty verdicts against two of his former allies, President Trump faces further investigation possibly leading to his impeachment.

Despite various drivers for the dollar, which led the dollar index to a high of 96.99, the positivity is fading and creating a correction which may lead to a downturn for the greenback.