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US dollar forecast: Preview for the Forex events that will rock currencies ► focusing on major events and especially on publications in the USA, moving the US dollar (greenback). Here is some general information. Scroll down for the latest US dollar outlook

USD and forex general characteristics

The United States Dollar is the reserve currency of the world. The dollar is the currency of choice for oil prices as well as other commodities. Foreign exchange pairs are divided into majors, minors, and crosses. Both majors and minors include the USD.

US events influence currencies more than any other event. The decisions and statements of Federal Reserve officials and economic developments in the US make the biggest waves. The US economy is the biggest in the world. US politics and policy also have an outsized impact on currencies.

The outlook consists of mostly US economic events but also key market-moving figures from other major economies. The euro-zone, the UK, and Japan stand out.

Recent USD Moves

The greenback had a bad start to the year: poor growth and scandals hurt the US dollar. Hopes for fiscal stimulus faded with the repeated failures to repeal Obamacare. Despite two rate hikes in the first half, the dollar struggled. Other economies outperformed America.

The second half already looks a bit different: economic growth reached 3% annualized and the Fed seems to stick to its plan to hike rates three times. In addition, Trump’s tax plan inspires markets, despite the dearth of details. The summer hurricanes and doubts about the tax plan limit the dollar’s gains.

Headwinds come from the political scandals. Low inflation also weighs on the dollar. If the “mystery” persists and wages do not accelerate, Janet Yellen and co. could refrain from further tightening.

Latest weekly US Dollar forecast

The greenback was unable to hold onto its rally as weak inflation continues weighing. What’s next? We will hear some Fed reactions and also a wide variety of figures from all over the world  Here are the highlights for the upcoming week.

The Fed meeting minutes, dovish comments from some Fed officials and finally weak inflation data all weighed on the dollar. Will it refrain from raising rates in December? A hike is still on the cards but the chances are lower. The pound was hit by talk of a deadlock in Brexit talks but then jumped on hopes that the current arrangements will last for a longer period of time. Catalonia’s President did not make an outright independence declaration, and this helped the euro as speculation about the QE tapering continues.

Updates:
  1. Janet Yellen talks: Sunday, 13:00, before markets open. The Chair of the Fed will address a forum of the G-30 and may provide some hints about the next moves coming from the central bank. She will have an opportunity to respond to the inflation figures.
  2. UK inflation data: Tuesday, 8:30. While a rate hike by the BOE in November seems like a done deal, we still do not know if it is a “one-off” or the beginning of tightening cycle. A lot depends on the developments in inflation. The data for August showed an annual rise of 2.9%, which is quite rapid. A rise to 3% is expected.
  3. Bill Dudley talks: Wednesday, 12:00. Dudley is, in effect, No. 2 in the Fed, as Vice Chair Stanley Fischer is stepping down. He has been quite upbeat about the economy, contrary to his previous dovish stance. Like Yellen, he will have an opportunity to comment on the inflation data.
  4. US housing data: Wednesday, 12:30. Building permits stood at an annualized level of 1.27 million in August while housing starts lagged behind with 1.18 million. If both figures go in the same direction, the dollar is set to move. However, the figures can also go in opposite directions, offsetting each other. Building permits are projected to tick down to 1.25 million while housing starts are forecast to remain unchanged.
  5. Australian jobs report: Thursday, 00:30. Australia enjoyed a big leap in jobs: a rise of 54.2K in August. The land down under enjoyed significant gains in employment during 2017. This time a modest rise of 15.2K is expected. The unemployment rate stood at 5.6% and no change is on the cards now.
  6. Chinese GDP: Thursday, 2:00. The world’s second-largest economy releases its GDP estimate for Q3. A better-than-expected annualized growth rate of 6.9% in Q2 and perhaps it will be more moderate this time: 6.8% is expected. The publication comes as the Chinese Communist Party convenes for its twice a decade Congress. In addition, the country will publish industrial output, retail sales, and other figures.
  7. US Existing Home Sales: Friday, 14:00. The last word of the week belongs to this housing figure. A disappointing number was seen in August: 5.35 million annualized sales. Most transactions are of second-hand, existing, homes. A level of 5.32 million is expected now.

*All times are GMT

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