Browsing: US Dollar Forecast

Ben Bernanke’s speech, German ZEW Economic Sentiment in the context of the Greek crisis and US Fed rate decision are the highlight of this week. Here’s an outlook for the major market-moving events.

At the beginning of last week head of the ECB, Jean-Claude Trichet implied the possibility of excluding countries from the Euro-Zone in his speech regarding the Greek debt. Assuming this is a valid option, it could have serious implications on many countries in the EU. Is this only a threat or the EU’s new course of action?

Let’s Start:

  1. Ben Bernanke speaks: Sunday, 18:30. Ben Bernanke Federal Reserve Chairman is scheduled to speak in Washington and may speak about the global slowdown and the downward trend in the job market. His words affect the market.
  2. Euro-Zone German ZEW Economic Sentiment: Tuesday, 9:00. German economists confidence dropped more than expected in May to 3.1 from 7.6 in April below forecasts of 5.0 amid global slowdown and the crisis in the Euro-Zone. A further drop to -1.1 is expected following the Greek debt crisis.
  3. US Existing Home Sales; Tuesday, 14:00. Sales of existing homes dropped in April by 0.8% reaching an annual rate of 5.05 million from 5.09 in March indicating difficulty to recover from the prior financial crisis. Analysts expected the number to rise to 5.2 million units. A decrease to 4.86 million is expected now.
  4. US rate decision, Wednesday, 16:30. In the last Feds meeting Chairman Ben Bernanke maintained rates at 0.25% while lowering its prediction for economic growth and inflation following rising unemployment and a general slowdown in the market. The benchmark rate is expected to remain 0.25%.
  5. US FOMC Press Conference: Wednesday, 18:15. In Ben Bernanke’s first official press conference after the FOMC meeting he implied Quantitative Easing 2 will not continue beyond June despite the general decline in economic activity.
  6. US Unemployment Claims: Thursday, 12:30. Unemployment claims decreased last week by 16,000 to a seasonally adjusted 414,000 better than predicted by economists however still above the 400,000 border. This drop does not signify a major improvement in the near future. Another decrease to 413,000 is predicted.
  7. US New Home Sales: Thursday, 14:00. Acquisition of new houses increased by 7.3% to a 323,000 annual rate while economists predicted a rise to 300,000 units. However foreclosures of previously owned homes continue to be more attractive to buyers posing further difficulties for the building companies. A smaller amount of 311,000 is expected.
  8. Euro-Zone German Ifo Business Climate: Friday, 8:00. German business sentiment remained flat in May despite predictions of another drop to 113.9 indicating business climate is optimistic.  Another small drop to113.6 is forecasted.
  9. US Core Durable Goods Orders: Friday, 12:30. New orders of durable goods dropped more than expected by 3.6% in April to the lowest level in six months led by a decline in orders for aircraft and motor vehicles. The low figure suggest companies do not plan to spend or invest their capital in the present situation. An increase of 1.1% is predicted now.

*All times are GMT.

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

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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