The US dollar is the single most popular currency in the world, and is also the most dominant reserve currency which is in use around the globe. Often nicknamed ‘The Greenback’ thanks to its green colouring, this currency is popular amongst traders who are looking to buy assets either from or within the United States. If risk aversion is running high, many traders often look to buy US Treasuries, which can create a demand for US dollars. However, what can we expect from the US dollar on the Forex market? Let’s take a look at the forecast.
The rate of employment in the United States was on the rise in November with 211,000 more jobs, giving the US Dollar more value on the Forex market. The measure of the jobs market provides a clearer picture of the current economy, with a level of 5.59 being expected in October – a rise after September’s 5.39.
However, unemployment levels in the US have also risen, with the number of people claiming unemployment increasing by a huge 9,000 to a total of 269,000 in the last week. This figure maintains a four-decade low in the history of claims numbers. However, there have also been fewer lay-offs and many workers have a sense of job security, allowing them to spend more during the holiday season. For this week, the number of jobless claims is expected to decrease to 266,000.
Amid an unexpected decline in the purchase of automobiles, October saw US retail sales increase by 0.1% – a figure which alongside the decline in automobile purchase shows a slowdown when it comes to customer spending. After a previous reported 0.1% rise in September, economists expected for that this month, retail sales would increase by 0.3%. After rising by 1.4% in September, automobile sales fell by 0.5%. In future weeks, retail sales are expected to rise by 0.2% and core sales by 0.3%.
After registering minus the previous month, US producer prices declined for the second month straight in October. These poor readings suggest a subdued rate of inflation due to the plans for the Federal Reserve to raise interest rates at some point in December. During the past twelve months, the PPI has dropped by 1.6% – the largest drop since the beginning of the series in 2009. During the coming month producer prices are expected to remain low and producer inflation is likely to stay weak.
During November the level of customer optimism rose to 93.1, which mean that it rose for the second month straight. This is a good sign for just before the holidays, beating economists’ predictions that it would be 91.3. This positive reading is taken by many to signify that customers are being reassured by low prices of gas, which is an improving labour market.
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