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The upcoming week will see the UK and the eurozone release consumer inflation data. As well, Japan releases GDP for the second quarter. 

In the Eurozone, CPI was revised to 0.4%, up a notch from 0.3%. The core reading came in at 1.2%, confirming the initial read.

British inflation levels moved higher in July. Consumer inflation climbed to 1.0%, up from 0.6% beforehand. The core reading also pointed higher, rising from 1.4% to 1.8%. Both releases beat expectations.

Japan’s economy lurched lower in Q2, falling 7.8%. The estimate stood at 7.5%. This reflected the strict lockdown measures in April and May which paralyzed the economy.

In the US, the Philly Fed Manufacturing index slowed to 17.2, down from 24.1 beforehand Unemployment claims surprised by climbing to 1.1 million, above the estimate of 930 thousand. The Federal Reserve minutes were dovish. Members stated concern about the continuing adverse impact of Corvid-19 on the US economy. The minutes also reiterated a call from Fed Chair Jerome Powell on the need for a fiscal package from Congress to boost the struggling economy. The week ended with good news from the manufacturing sector, as Manufacturing PMI improved to 53.6, its highest level since February 2019.
  1. Bank of Japan Core CPI: Tuesday, 5:00. This is the preferred inflation gauge of the Bank of Japan, so investors will be monitoring it carefully. The index ticked up to 0.1%, up from 0.0% beforehand. Little change is expected in the June release.
  2. German GDP: Tuesday, 6:00. The German economy plunged 10.1 in the second quarter, reflective of the enormous damage caused by Covid-19. The final reading is expected to confirm the initial read.
  3. US GDP: Thursday, 12:30. The initial estimate for GDP in Q2 came in at a staggering -32.9%. The second estimate is expected in at -32.5%, so the market reaction to the reading is expected to be muted.
  4. French GDP: Friday, 6:45. The previous release of Q2 growth data was dismal, with a reading of -13.2%. This release will likely confirm the initial figure.
  5. Canada GDP: Friday, 12:30. Canada releases GDP on a monthly basis. In May, the economy showed a gain of 4.5%, bouncing back from a sharp decline of 11.6% a month earlier. Another gain is projected for June, with an estimate of 5.2%.
  • 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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