Browsing: US Dollar Forecast

Ben Bernanke Testifies before the House Budget Committee, US Employment Claims, Trade Balance and Prelim UoM Consumer Sentiment. These are the major events this week. Here is an outlook on the market-movers ahead.

The euro rate rose to 2.4 percent in January, the highest in more than two years, In Germany import-price inflation is running at the fastest pace in 29 years, and political tensions in Egypt stir up oil prices. It is nearly inevitable that the ECB will raise borrowing costs before Europe overcomes its debt crisis

  1. Ben Bernanke Testifies: Wednesday, 15:00. Federal Reserve Chairman Ben Bernanke testifies on economy before the House Budget Committee on economic, employment and budgetary issues, in Washington DC where he will talk about the second round of quantitative easing and how it is helping European borrowers hurt by the sovereign debt crisis at home. His words gave a major effect on the market.
  2. Australian Employment Data: Thursday, 0:30. Fewer workers were added to the labor force in December less than forecasted. Employment grew by 2,300 workers much below the 25,000 expected. However Australian Unemployment rate fell to a lower-than-expected seasonally adjusted 5.0% in December from 5.2% in November. Employment is expected  a nice increase of 20,300 new jobs while Unemployment rate is likely to remain 5%.
  3. Britain Rate decision: Thursday, 12:00. The Bank of England has decided to leave interest rates unchanged at 0.5% in line with expectations. Although Consumer Price Inflation rose 3.3% in November and Retail Price Inflation was 4.7%.Andrew Sentance, has repeatedly voted for an increase in interest rates – if only to show people that the committee is determined to tackle prices – which are rising nearly twice as fast as the Bank had anticipated. For now the BOE is predicted to maintain rates at 0.50%.
  4. US Unemployment Claims: Thursday, 13:30. The number of Americans filing initial unemployment claims dropped drastically by 42,000 reaching a seasonally adjusted 415,000 new claims. This drop is more than the 420,000 expected signaling a real recovery in the job market. Last week’s claims were distorted by extreme winter weather which did not exemplify the real situation in the market. A further drop to 411,000 claims is forecasted this week.
  5. US Trade Balance: Friday, 13:30. The U.S. trade balance, which measures the difference between the nation’s imports and exports, narrowed slightly to a $38.3 billion deficit in November, a slight drop from $38.4 billion in October. This deficit lies heavy on the shoulders of the US economy while China builds a massive trade surplus creating imbalances in global trade. Trade Balance Deficit is expected to widen to -40.4 billion.
  6. American Prelim UoM Consumer Sentiment: Thursday, 14:55. Consumer confidence dipped in early January to 72.7, down from 74.5 at the end of December and last month’s preliminary 74.2. The drop in confidence is probably due to weak job growth and rising energy prices. Nevertheless, spending has increased due to payroll tax holiday and the new reading is expected to climb to 74.6.

* 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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