Browsing: US Dollar Forecast

The US Dollar is paring some of its yearly gains on the last day of 2018. What do the first days of 2019 have in store? The Non-Farm Payrolls report stands out. Here the highlights for the next week.

Stock markets calmed down after a few volatile weeks and the US Dollar is turning a bit lower, but currencies remain calm ahead of the New Year parties. Trump tweeted about a successful conversation with his Chinese counterpart Xi and lifted the mood. Hopes for delaying Brexit push the pound higher. The euro enjoys stability after the Italian budget was passed at the last minute. Commodity currencies are stabilizing despite additional signs of a slowdown from China.

  1. US ADP Non-Farm Payrolls: Thursday, 13:15. ADP is the largest provider payrolls publishes its jobs report for the private sector. According to the firm, the US gained 179K positions in November. The last month of the year is expected to see a very similar increase: 180K.
  2. US ISM Manufacturing PMI: Thursday, 15:00. Coming shortly after the ADP report, this publication provides another hint for the NFP. The forward-looking gauge for the manufacturing sector had a robust score of 59.3 points in November. A small slide to 58.2 is on the cards for December.
  3. Euro-zone inflation: Friday, 10:00. The headline increase in the Consumer Price Index stood at 2% in November, bang on the ECB’s target. However, core CPI stuck to 1%. Core CPI is projected to remain at 1% while the fall in fuel prices is set to slow the headline CPI to 1.8%.
  4. US Non-Farm Payrolls: Friday, 13:30. The final jobs report for 2018 provides an overview of the year and also feeds into the Fed decision due at the end of January. The report for November disappointed with 155K but wages increased by 3.1% y/y. This time, an increase of 0.3% is expected in salaries while the nation is forecast to enjoy a rise of 181K jobs. The unemployment rate is expected to remain unchanged at 3.7%. A disappointment rise in job gains may be attributed to a shortage of skilled labor, something that could push earnings higher.
  5. Canadian jobs report Friday, 13:30. Canada saw a leap of no less than 94.1K jobs back in November, pushing the jobless rate down to 5.6%. We may see a drop in positions now. Canada suffers a high level of volatility in its labor market reports. Apart from these figures, the mix of full-time and part-time jobs also plays a role, and so do wages.
  6. US Fed Chair Powell talks Friday, 15:35. The world’s most powerful central banker will speak at the American Economic Association’s Annual Meeting, in Atlanta. Powell has been highly criticized by President Trump and his slightly hawkish tone has not gone down well with markets. It will be interesting to hear his comments at the wake of the new year and after the NFP.

*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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