Browsing: US Dollar Forecast

The Halloween week was hectic with a confusing Fed decision, contradicting data, and no Brexit. The action continues with BOE’s Super Thursday, and fresh reports from the stronger parts of the US economy. Here the highlights for the upcoming week.

The EU granted the UK a three-month extension, releasing pressure. Instead of ratifying the Brexit accord, parliament voted in favor of elections in mid-December. The Federal Reserve cut rates and signaled a pause as expected. The Fed’s answer to what is will do next seems to be dovish – the bar for raising rates is higher than that for cutting them. Data was mixed, with a disappointing ISM Manufacturing PMI, mixed GDP figures, and an excellent Non-Farm Payrolls. What’s next for currencies?

  1. Christine Lagarde talks Monday, 19:30. The new President of the European Central Bank delivers her maiden speech in Berlin, in front of the architects of austerity policy, while she is calling on governments to do more. Her comments are set to rock the euro.
  2. Australian rate decision: Tuesday, 3:30. The Reserve Bank of Australia has cut interest rates three times this year but is now expected to pause. While the RBA wants to see the unemployment rate drop below 5% and see inflation return to the 2-3% target, it may wait for further developments now. The Aussie will move in response to the statement’s tone – especially comments on the global economy.
  3. US ISM Non-Manufacturing PMI: Tuesday, 15:00. After ISM’s forward-looking figure for the manufacturing sector disappointed and remained in contraction territory, the services figure is expected to advance and show continued growth. An increase from 52.6 to 53.5 is on the cards. While it does not serve as a hint to the Non-Farm Payrolls, the indicator tends to rock all markets.
  4. New Zealand jobs report Tuesday, 21:45. The nation publishes employment figures only once per quarter, making every publication significant. New Zealand enjoyed a jobless rate of 3.9% in the second quarter, and it is expected to rise to 4.1% in the third quarter. The employment change figure is projected to advance at a moderate pace of 0.2% after a leap of 0.8% beforehand.
  5. BOE Super Thursday: Thursday, 12:0l0, press conference at 12:30. The Bank of England announces its rate decision, publishes the meeting minutes from that event, and also releases its Quarterly Inflation Report. While the bank is waiting for more clarity on Brexit, Prime Minister Boris Johnson’s new accord with the EU provides some calm, allowing the BOE to be more upbeat. Mark Carney, Governor of the Bank of England, will hold his last press conference as the head of the central bank and will answer a broad range of questions. The Canadian central banker will probably dodge questions about Brexit. The identity of his successor remains unknown. The pound will likely move on the inflation forecasts in the QIR and may fall if the BOE drops its hawkish bias.
  6. Canadian jobs report Friday, 13:30. Canada publishes its jobs report one month after the US, allowing the data to move USD/CAD on its own. Canada gained a whopping 53.7K jobs in September, far above expectations. The jobless rate fell to 5.5%, also encouraging. More moderate changes are likely now.
  7. US Consumer Confidence: Friday, 15:00. The preliminary Consumer Sentiment Index report from the University of Michigan for November has the last word of the week. The forward-looking indicator for retail sales has recovered from the lows and hit 95.5 points in October. Another advance to 96 points is on the cards now.

*All times are GMT

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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

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