Browsing: US Dollar Forecast

Markets continued rattling on Trump’s trade wars while EUR/USD got an extra dose of volatility with the powerful mix of both the dovish ECB decision and the Non-Farm Payrolls.  US retail sales, consumer confidence, and inflation stand out in the second week of June. Here the highlights for the next week.

The US and China have intensified their rhetoric against each other — blaming the failure of trade talks on each other, limiting the operations of companies from the other country, and threatening additional sanctions. The atmosphere weighed on markets and added to concerns about a global recession. The odds of a rate cut from the Fed have risen.

  1. UK GDP:  Monday, 8:30. Britain switched to publishing GDP figures on a monthly basis last year. The new system enables an initial look at the economy’s performance in the second quarter of 2019. Output squeezed by 0.1% in March, when the UK was on course to leave the EU on March 29th — eventually postponed to October 31st. The upcoming release for April will likely be similarly downbeat, indicating a growing chance of an outright recession.
  2. UK jobs report Tuesday, 8:30. Last month’s employment numbers were mixed — a surprising drop of the unemployment rate to 3.8% in March — a record. On the other hand, wage growth moderated with 3.2%, lower than previously. The upcoming data is for April. The current data will likely mostly itself. The Claimant Count Change has been on the rise of late — 24.7K in April — but the rise in jobless claims has not resulted in an increase in the jobless rate. The figure for May will also likely show an increase in those looking for work.
  3. US inflation:  Wednesday, 12:30. Fed Chair Jerome Powell insisted that recent weakness in inflation has been transitory — and the rise of Core CPI to 2.1% y/y in April vindicates his words. However, the data for May may pose another challenge for the Fed, which convenes for a critical meeting in the following week. Headline CPI rose by 0.3% m/m in April and Core CPI by 0.1%.
  4. Australian jobs report: Thursday, 1:30. After the Reserve Bank of Australia slashed interest rates, it will be interesting to see if the labor market remains in the spotlight and will shape the next rate decision. The economy gained 28.4K in April and the unemployment rate stood 5.2% — above the previous lows but still a level to envy. A more moderate gain in positions is likely in the report for May.
  5. Swiss rate decision: Thursday, 7:30, press conference at 8:00. The Swiss National Bank has left its interest rate at -0.75% — deep in negative territory — since it removed the EUR/CHF peg back in January 2015. The SNB has also maintained its pledge to intervene in currency markets as much as it deems necessary. In its quarterly decision, the organization led by Thomas Jordan is forecast to leave its policy unchanged. He may stress that intervention may become necessary as safe-haven flows are pushing the value of the franc higher and as the euro is on the back foot after the dovish ECB meeting.
  6. US retail sales:  Friday, 12:30. The US consumer has taken a break in its shopping spree. Back in April, the total volume of sales increased by only 0.1% while core sales squeezed by 0.2%. A bounce is likely in the report for May, but probably only a moderate one.
  7. US consumer confidence: Friday, 14:00. Consumer confidence improved in May, but the final figure saw a downgrade, taking out some of the sting. After a score of exactly 100, the preliminary figure for June from the University of Michigan has probably dropped below the round number. Consumer confidence is considered a leading indicator of consumption — yet the correlation is not always there.

*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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