On Monday, the USD declined against the major currencies amid increasing doubts that the Fed would not raise interest rates in the nearest months. According to CME Group's, on Monday, investors assessed probability of the rate hike in December at 52% against 54% last Friday and almost 60% in the middle of last week.
Last meeting of the Fed, which ended on September 21, has lowered risks of the sharp increase in rates in the United States. It seems that instability in the recovery of the US economy may prevent the rate hike. The most skeptical investors believe that the increase in U.S. interest rates is unlikely before mid-2017.
Today, the USD received unexpected momentum for the decline due to the presidential debates in the United States. It seems that the candidate of the Democratic party Hillary Clinton has won the debates while Republican party candidate Donald Trump has lost. According to some economists, in case of Trump’s victory the USD could have risen by 10% within next 12 months. During the election campaign in the United States Trump promised tax cuts for the companies, which could have supported economic growth in the country and the USD. Elections in the United States will be held on the 8th of November.
Elections in the United States and statements of the Fed officials are likely to determine movement in the USD this week.
After the indication that the Reserve Bank of New Zealand may reduce rate at the meeting in November, the NZD declined last week.
Probability of the rate cut in New Zealand on 9 November is high, and this fact will put pressure on the NZD. Due to lack of important news from New Zealand this week, the USD will determine movement direction in the pair NZD/USD.
American data will be released today as follows:
At 16:45 (GMT+3) business activity index in the services sector and Markit preliminary composite index of business activity in the United States for September;
at 17:00 US consumer confidence index for September According to the forecast the index will be at the level of 99.8 against 101.1 in August, which may have a negative impact on the USD;
At 18:15 a speech by the Fed Vice-Chairman Stanley Fischer. His speech may increase volatility in pairs with the USD and NZD/USD.