Browsing: US Dollar Forecast

We ended the week with QE3 off the table. Or is it? US housing data, and Consumer confidence, US FOMC Meeting Minutes, Canadian and Swiss GDP, US employment data including NFP are just a few of the interesting events awaiting us this week. Here is an outlook on the major market-movers ahead.

Last week US durable goods orders leaped by 4%, well above the 2.1% increase expected. The German Ifo Business Climate was weaker than expected and the ZEW Economic Sentiment  It fell to a level of -37.6, much worse than estimated. Will we see further improvement in the US economy this week? And will the Euro-zone crisis continue?

Let’s start

  1. US Pending Home Sales: Monday, 14:00. US Pending home sales climbed by 2.4% in June reaching 90.9 after rising by 8.2% in May due to the expiration of the federal homebuyer tax credit. In order to ensure recovery in home sales the market needs to have normal credit conditions to enable buyers to get convenient mortgages. A drop of 0.2% is expected now.
  2. US CB Consumer Confidence: Tuesday, 14:00. U.S. consumers Confidence unexpectedly increased in July to 59.5 following a revised 57.6 reading in June. Economists expected sentiment to reach 57.1. The increase was mainly due to a decrease in oil prices but may go down again if unemployment will remain above the 9.0% line. A drop to 52.4 is predicted.
  3. US FOMC Meeting Minutes: Tuesday, 18:00. In its last FOMC Meeting the Feds decided to maintain the interest rates between 0.00% and 0.25 %, in line with predictions, and added a pledge to leave rates unchanged until mid 2013. We already know that 3 out of 10 members opposed it. We’ll now get to see the details.
  4. US ADP Non-Farm Employment Change: Wednesday, 12:15. Private employment grew by 114,000 in July following 145,000 additional jobs in July. These readings are lower than required for a real change in the job market, although small businesses show a continuous improvement. A lower number of 105,000 new jobs is expected.
  5. Canadian GDP: Wednesday, 12:30. Canada’s gross domestic product slid unexpectedly by 0.3% in May, following wildfires damaging mining gas and oil sectors. This may also reflect upon the 2nd quarter. This pessimistic condition will not give room for rate hikes in the near future. A flat reading is expected now.
  6. Swiss GDP: Thursday, 5:45. The Swiss economy expanded by a mere 0.3% in the first quarter with lower consumption and investments following 0.8% gain in the previous quarter. Economists predicted 0.6% rise. Nevertheless exports are still strong.
  7. US Unemployment Claims: Thursday, 12:30.  Initial claims for unemployment benefits increased more than expected last week rising by 417,000 while  expecting 403,000 increase due to a strike declared by Verizon Communications artificially inflating the number of jobless claims and can badly affect the non-farm payrolls. But the overall level of jobless claims without Verizon strike would stand at 410,000 which is not so bad but also not good enough. A drop to 409,000 is predicted now.
  8. US ISM Manufacturing PMI: Thursday, 14:00. U.S. ISM Manufacturing PMI increased for the24th consecutive month from 55.3 in June to 50.9 growth in July indicating more economic activity in July and a general sense of expansion. A drop to 48.9 is forecasted.
  9. US Non-Farm Employment Change: Friday, 12:30. – U.S. Nonfarm payrolls expanded more than expected in July rising by 117,000 new jobs compared to 46,000 gains in the previous month and above the 85,000 new jobs estimated. This impressive growth indicates better chances for a real growth and a strong recovery in 2012. A smaller gain of 99,000 new positions is expected now.
  10. US Unemployment Rate: Friday, 12:30. Unemployment rate has contracted to 9.1% in July after a generous job growth of 117,000 indicating improvement in the US economy and the job market. The same rate is expected now.

That’s it for the major events this week. Stay tuned for coverage on specific currencies

*All times are GMT.

Further reading:

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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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