The dollar is unlikely to move much next week due to the lack of major economic events. Due to the unique circumstances of the US, there’s another event that may cause the greenback to move. The currency will be especially vulnerable in the coming week.
US markets are closed on Thursday. They will only be open half a-day on the Friday. The market could be affected by a lack of liquidity if many traders take more days off than the two. The US Treasury plans to auction nearly $250B worth of debt during this time. The market may react to either the results of this auction or the effect of draining so much money from markets. Or both.
Here’s What You Need to Know
The US government is facing a huge deficit. It’s not as large as it was during the covid but is more than twice as high as before. It means the country has to borrow more money from the money market. Meanwhile, the traditional large buyers of US debt – China and Japan – are selling their debt. The Fed is also selling its debt. This means that even though the US government is increasing the amount of bonds it sells, the demand is expected to fall.
Previous posts have discussed the impact of bond yields on prices.