us federal reserve

Dollar in focus today

5th January 2018 Market Update

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?? GBP – Services data and mortgage approvals helped prop up the pound yesterday as both results beat the forecasted figures. The gains were slightly muted though as there are no macroeconomic releases for the UK today and as such the rates will be determined by movement in other currencies.

?? EUR – The euro is near three-year highs against the USD as economic growth in the region has put the ECB in a position to potentially start removing stimulus and get on the road to raising interest rates. Yesterday’s services data helped buoy this sentiment as it beat estimates. Today, inflation figures will be watched eagerly as low inflation has long been a sticking point for the ECB not to raise interest rates.

?? USD – The USD fell yesterday even though a strong jobs figure was released by way of the ADP who showed that 250,000 jobs were added in December, smashing forecasts of 190,000 jobs.

The dollar is struggling to find some support, though today we have a plethora of data releases from across the pond. With the all-important Non-Farm payrolls due this afternoon along with the unemployment rate, average earnings, factory orders, durable goods orders along with two Fed speeches later in the day which will focus on economic outlook and monetary policy respectively. We could see some dollar recovery today if the data is as positive as expected.

 

Key Announcements

?? EUR
10:00am: Consumer Price Index (December) – expected at 1.4% from previous 1.5%

?? USD
13:30pm: Non-Farm Payrolls expected at 190,000 from previous 228,000
13:30pm: Unemployment Rate expected to remain the same at 4.1%
15:00pm: ISM Non-Manufacturing expected at 57.6 from previous 57.4
15:00pm: Factory Orders expected at 1.4% from previous -0.1%
15:00pm: Durable Goods Orders

 

Summary: The pound was supported by positive data releases yesterday but may struggle today in the absence of anything being released from the UK.
 
The euro seems to be the winner across the big three this week as it pushes to new highs against the dollar and clawed back some ground against the pound yesterday afternoon. Today though we may see some dollar recovery as data is almost exclusively from the US this afternoon, with jobs figures expected to be better than previous and factory and non-manufacturing data to also report an increase.

 

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Darren Kilner

Darren Kilner

Darren is Head of Dealing at FairFX. Darren lives and breaths FX, his Mastermind topics are G8 currencies and economic forecasts.

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