"We haven't seen an acceleration in growth yet that the Fed is looking for to begin tapering"
- Joshua Dennerlein, an economist at Bank of America Merrill Lynch
The U.S. Dollar soared 0.61% against other major currencies during the last five trading days, while EUR/USD fell to 1.329 on Thursday. And even though technical indicators are pointing the greenback is overbought already, and market's attitude towards U.S. Dollar is not clearly marked (bought in 54% of all cases), there are several reasons why the greenback can appreciate even further. This week's reports that will be moving markets are the trade balance and Empire State manufacturing, which are both usually having a significant impact on the Dollar. Trade balance is not expected to show some major changes, while manufacturing index is likely to rise, suggesting government shutdown had little effect on factories.
While all the above-mentioned fundamental reports are expected to push the greenback higher, the Federal Reserve may shed some light on its future monetary plans, as on Thursday is scheduled Senate Banking Committee, with the hearing of Janet Yellen nomination as the next Fed Chairman. Yellen, who was assigned for the position by Barack Obama and would become the first women to rule the Fed, is known for her dovish views. She does not like unemployment rate to be too high, neither did Bernanke, however, Yellen already pledged to set her priorities that would differ from the ones that Ben used to stick to. Though Yellen is likely to see weaker U.S. Dollar, a drop in unemployment claims and better-than-expected payrolls may force the Fed to shake markets once again.
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