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 was mixed across the board despite big events in markets. Will this continue? The upcoming week features events from all over the world.  Here are the highlights for the upcoming week.

Jay Powell has been nominated to be the next Chair of the Fed. Trump, troubled with developments in the Mueller investigation preferred an insider at the Fed which is set to continue the current policy and not John Taylor, a known hawk. The current Fed Chair Janet Yellen oversaw one of her last rate decisions and did not rock the boat. The FOMC statement expressed satisfaction about growth but said that inflation is soft. Nevertheless, they are set to raise rates in December. The BOE sure made markets move with a “dovish hike“. After the expected rate rise, Carney, and co. forecast only two hikes in three years and this sent the pound tumbling down. The crisis in Catalonia is far from a resolution but the euro ignores it. What’s next?

  1. FOMC’s Dudley talks: Monday, 17:10. The President of the New York Fed is a permanent voter and this speech in New York will be an opportunity to react to the nomination of Powell as Fed Chair, as well as the Fed’s classification of inflation as “soft” rather than transitory.
  2. Australian rate decision: Tuesday, 3:30. The Reserve Bank of Australia recently made some dovish voices and opened the door to rate cut, albeit not in the near future. Since then, the inflation report came out below expectations and weighed heavily on the Aussie dollar. Will they send a more dovish message? Or are they pleased with the downfall of the A$?
  3. US JOLTS Job Openings: Tuesday, 15:00. Just after the Non-Farm Payrolls report, we get a belated, yet meaningful figure for the Fed. The number of job openings and quits serves as a gauge of the wider jobs market. Back in August, the number of opening stood at 6.08 million, maintaining the high ground above 6 million. A similar figure is likely now: 5.98 million.
  4. New Zealand rate decision: Wednesday, 20:00. One week after the jobs report and as the kiwi dollar looks weak, the Reserve Bank of New Zealand convenes to discuss its policy. The interest rate stands at 1.75% since late 2016, when it was last reduced. The big downfall of the exchange rate should keep the acting governor Grant Spence and his team happy and they are unlikely to cut interest rates. The new Labour-led government is expected to change the mandate of the RBNZ, and this point will also feature
  5. US jobless claims: Thursday, 13:30. The weekly barometer of the jobs market returned to normality after long weeks of distorted data due to the hurricanes. The publication is usually overshadowed by other events, but this week it gets a bigger share of the limelight. A small rise from 229K to 231K is on the cards.
  6. US consumer confidence: Friday, 15:00. The University of Michigan consumer confidence measure topped the 100 level after a few months beneath it. Will this continue? In theory, higher consumer confidence implies enhanced consumer spending. A score of 101 is projected.

*All times are GMT

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