Browsing: US Dollar Forecast

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

USD and forex general characteristics

The United States Dollar is the reserve currency of the world, partly due to its use in settling oil prices and other commodities. Foreign exchange pairs are divided into majors, minors, and crosses. Both majors and minors include the USD.

US economic indicators and political developments influence currencies more than anywhere else in the world. The decisions and statements by Federal Reserve officials make the biggest waves. The US economy is by far the largest 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 suffered 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 lot 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 hurdles to pass it before Christmas.

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. The new Fed Chair Jerome Powell will take office in February 2018, and he may not stick to the current plan of raising rates three times.

Latest weekly US Dollar forecast

The US dollar rocked and rolled on the Fed’s dovish hike and the renewed fears of a trade war. Politics will continue moving currencies and we also have final US, UK, and Canadian GDP as well as other figures ahead of Easter. Here are the highlights for the upcoming week.

The Fed raised rates as expected but did not change the dot-plot forecast for 2018, leaving two more rate hikes on the cards this year. The upgrades for 2019, 2020, and the long-term were minimal. In addition, Powell echoed concerns about trade and said he was surprised wages did not rise. The dollar did not like it. On the trade front, the Administration approved exemptions to Europe, Canada, Mexico, Australia and several other countries and turned its attention to China. The greenback continued struggling especially against the yen and not so much against the Australian dollar. The pound enjoyed the announcement of transition Brexit deal, even though there are a few holes in it. The euro was relatively steady as the dollar’s weakness was countered by fears that euro-zone growth has peaked.

  1. US CB Consumer Confidence: Wednesday, 14:00. The Conference Board’s measure of consumer confidence rose to a high level of 130.8 points in February and another increase to 131.2 is on the cards now. The parallel University of Michigan figure for March has already surprised to the upside.
  2. US GDP (final): Wednesday, 12:30. The third and final read of US growth for Q4 2017 is expected to show a small upgrade from 2.5% to 2.7% annualized growth. The world’s largest economy enjoyed robust growth in Q2, Q3, and also Q4, while prospects for Q1 2018 already look dimmer.
  3. Pending Home Sales: Wednesday, 14:00. Sales pending the final transaction fell sharply in January, by 4.7%. A rebound is now on the cards. Figures from the housing sector were mixed lately.
  4. UK GDP: Thursday, 8:30. The UK economy grew at a slower pace than many of its peers in 2017. The final quarter saw a growth rate of 0.4% q/q according to the second estimate and the final read is expected to confirm it. While changes to the quarterly growth figures are not common, a change to the annual number happens quite often.
  5. Canadian GDP: Thursday, 12:30. Canada is unique in publishing growth figures on a monthly basis. Back in December, the economy grew by 0.1% m/m. We will now get the first read for January, a peek into the new year.
  6. US Core PCE Price Index: Thursday, 12:30. This is the Fed’s favorite inflation measure and has an impact despite coming after the CPI data. Year over year, the Core PCE increased by 1.5% in January and the same figures are projected for February. Month over month, core prices are projected to rise at a slower pace: 0.2% after 0.3% beforehand. The US also releases personal spending, personal income, and weekly jobless claims at the same time.

*All times are GMT

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