Ahead of the Fed announcement the U.S. dollar index traded at fresh 20-year highs and that followed into Thursday’s session. Concerns about rising interest rates and the economy have continued to make the U.S. currency a safe haven for investors. Market analysts say they may not change course until they see evidence that the Fed is going to reverse their policy path and cut rates. And Wednesday they signaled that may take months.
Oliver Sloup with Blue Line Futures says, “If that’s the case I wouldn’t be surprised to see the dollar have a bit of a blow off top coming around the corner. Again, the path of least resistance is up, so I wouldn’t go to the bank looking for that today but eventually the dollar will peel off and when that does happen, I think you’ll see a pretty big boost in some of these commodity markets.”
When the dollar strengthens against other world currencies it makes U.S. exports more expensive, which is a headwind for sales and commodity prices.
