US Dollar is slightly under pressure in the beginning of the week due to the deluge of unsatisfactory data lately which give raise to dovish expectation for the next FOMC statement. Most analysts do not expect FOMC to indicate significant change on interest rate timing.

US Dollar is slightly under pressure in the beginning of the week due to the deluge of unsatisfactory data lately which give raise to dovish expectation for the next FOMC statement. Most analysts do not expect FOMC to indicate significant change on interest rate timing. Here is a compilation of some experts' opinion.


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Kathy Lien from BK Asset Management wrote, Between a slowdown in manufacturing and service sector activity along with the weakest pace of non-farm payrolls growth since December 2013, there’s no doubt that the recovery lost momentum over the past month. The Federal Reserve is not expected to change monetary policy but dollar bulls cant help but worry that the central bank will take June tightening off the table.

Nomura stated, We do not expect the FOMC to signal significant shifts in its policy expectations at its meeting this week. After the major changes made at its meeting in March—just 5 1/2 weeks ago—the amount of new information that the Committee has to digest is relatively modest. Moreover, recent statements by FOMC officials do not suggest major shifts in their expectations, and preferences, for the path of policy. That said, the data that have come in, particularly for the labor market, have been less positive. The FOMC’s statement is likely to acknowledge this deterioration. Nonetheless, financial markets have been relatively stable since the March FOMC meeting. We do not expect the Committee to suggest that the recent weakness in economic data has had a notable impact on its medium-term outlook for the economy and policy.

Kit Juckes from Societe Generale as quoted by FXStreet, The Fed's two-day meeting starts today but we can contain our excitement. A dovish statement and no policy moves are universally expected. In the meantime, Case-Shiller house price and Richmond Fed manufacturing data won't add much to the debate, while yesterday's dip in the services PMI to 57.4 from 59.2 supports the notion that the US economy is growing, but not as fast as it was or as some would like it to,

Furthermore, Juckes mentioned, The US is the only G10 market where 2-year rates are higher now than they were six months ago (14bp higher) and that in turn is reflected in the dollar having gone up against all the rest of G10FX. But if we look at the last three months, US rates are up only 6bp, and we've had bigger rises in NOK, GBP and CAD. At the risk of stating the obvious, the dollar, up between 8% (vs CHF) and 24% (vs SEK) over the last year, has been re-priced on monetary policy divergence and won't make further headway until that trend resumes. In the meantime, the FX market is once again gravitating towards yield - and the four currencies with the highest rates in G10 are indeed the ones which have done best this week. It sounds like a recipe for lower volatility and for money to leach towards emerging markets (again) until the US rate outlook changes again.