Browsing: US Dollar Forecast

US Employment Data as well as ISM Purchasing Managers’ Index are the main events on this busy week. Here is an outlook on the major market movers.

Following the US rate meeting, the Fed said that despite signs if a real recovery, high unemployment still calls for the continuation of the $600 billion bond-buying program. Nevertheless commodity prices are rising creating a moderate inflation that may urge the Fed to hike rates this year.

  1. Canadian GDP: Monday, 13:30. Real GDP gained 0.2% in October, following a decline of 0.1% in September mainly due to Mining & oil & gas extraction activity. In light of this another slow growth quarter is expected. The same gain of 0.2% is expected now.
  2. Australian Rate Decision: Tuesday, 3:30. At its last meeting, the Reserve Bank of Australia decided to leave the cash rate unchanged at 4.75%, after hiking it by 0.25% in November. This decision comes in line with expectations. The Reserve Bank does not expect major inflation growth over the next few quarters. Cash rate is predicted to remain 4.75%.
  3. US ISM Manufacturing PMI: Tuesday, 15:00. Manufacturing activity in the U.S. rose to 58.5 in December after dropping to 56.6 in November while analysts had expected 57.3. PMI has remained above the neutral 50.0 mark for 17 consecutive months indicating industry expansion trend. A small decrease to 57.7 is likely to occur.
  4. American ADP Non-Farm Employment Change: Wednesday, 13:15. U.S. non-farm private employment rose by a seasonally adjusted 297K in December, after rising by 92K in November. Analysts had expected a 101K gain. This is the eleventh consecutive monthly gain and the largest monthly increase in the history of the report. A smaller rise of 151K is forecasted.
  5. New Zealand‘s Employment Data: Wednesday, 21:45. Unemployment rate in New Zealand fell to 6.4% reaching 150,000 in the third quarter of 2010 better than 6.7% expected following 6.9% in the previous quarter. New Zealand’s economy is in growth for five consecutive quarters resulting in more businesses hiring new workers with 0.1% gain in new jobs. Unemployment rate is predicted to rise to 6.5% and the job market is expected another rise of 0.2% new jobs.
  6. Euro-Zone Rate Decision: Thursday, 12:45. The set the benchmark rate at 1% for the 21st month in line with predictions. The Low rates provide liquidity in the market to encourage growth. The ECB has to decide when to stop buying government assets, withdraw unlimited liquidity provision for banks and possibly even raise rates to stem inflation risks. Minimum Bid Rate is expected to remain 1.0%.
  7. US Unemployment Claims: Thursday 13:30. A setback in the Job market was registered last week with a drastic rise of initial unemployment claims amounting to 454,000 from 403,000 in the previous week, much worse than the 407,000 predicted. Jobless claims can differ from week to week and the recent snowstorms and layoffs of temporary holiday workers could explain January numbers.
  8. US ISM Non-Manufacturing PMI: Thursday, 15:00. The service sector in the U.S. grew more-than-expected in December reaching to 57.1 after 55.0 in November, expanding for the eleventh consecutive month. Analysts had expected the index to rise to 55.7. This climb indicates expansion in the US market. A further growth to 57.3 is predicted now.
  9. Bernanke Speaks: Thursday, 18:00. Federal Reserve Chairman Ben Bernanke is due to deliver a speech titled “The Economic Outlook and Macroeconomic Policies” at the National Press Club Luncheon, in Washington DC where he may elaborate on his view to continue the  $600 billion bond-buying plan due to the fragile job market situation. His words have major influence in the markets.
  10. American Non-Farm Employment Change: Friday, 13:30. December payrolls gained a disappointing 103,000 while expecting an increase of 159 000 following 71,000 in December. The relatively low figure comes as a surprise in light of the strong ADP report. A rise of 132,000 is expected now.
  11. US Unemployment Rate: Friday 13:30. The unemployment rate dropped to 9.4% in December from 9.8% in November the biggest one-month decline since April 1998. Economists had been expecting the unemployment rate to remain flat. The latest increase in job growth is another sign that the U.S. economy is gradually emerging from its malaise following the official end of the recession in the summer of 2009. Unemployment Rate is expected to grow to 9.5% this month.

* 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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