Yellen comments, U.S. GDP to weigh on dollar
Investors will give utmost attention this week to the Fed’s two-day policy meeting concluded on Wednesday, along with the U.S. advanced GDP reading for the first three months of 2015, as it is likely to shape the dollar’s movements against majors.
Fed Meeting Outcome
-Probably, there will be surprise from the Fed on Wednesday as the Fed statement of March mentioned it was “unlikely” to see an interest rate hike in April.
-Hawkish or dovish comments from Fed Chair Janet Yellen about the economy will affect market sentiment, and thereby weigh on the green currency’s direction.
-Yellen will probably discuss the first quarter growth figures, conditions of the labour market, as well as core inflation and wage growth.
-She may hint to a possible delay in the Fed’s rate hike on the back of the recent deterioration in economic data.
-Talks may also include the impact of the dollar’s appreciation on U.S. trade and the latest developments in the Greek crisis.
-Growth data will be carefully watched, as investors aim to get a clearer image about the economy, following the release of a parade of weak economic data.
-The world’s biggest economy witnessed a slowdown in economic growth in the first three months this year to record 1.1 percent expansion, compared to 2.2 percent in the previous three months, according to median forecasts.
-Economists attribute the ease in growth to the negative impact of the winter freeze that hit the U.S. East Coast early this year.
-After posting a sharp retreat against a basket of major currencies, according to the dollar index, the greenback may face further downside pressure in case Yellen has referred to any bearish comments about the economy or hinted to a possible delay in raising interest rates.
-For this week, the dollar index is estimated to wobble between key support at 96.30 and key resistance at 98.00.