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Currency Analyst since 2010

USD is supported by good data

US dollar strengthened versus most major currencies after data showed the US trade deficit fell to a 4-year minimum boosting expectations for American economic growth. Barclays, for example, doubled its estimate for US GDP growth in Q4 of 2013.

Analysts at NAB expect a stronger USD. They point out that the Federal Reserve will watch US economic data and “at the moment there’s nothing to seriously upset expectations that the economy will be in an OK enough state for them to proceed” with QE tapering. San Francisco Fed President John Williams said yesterday the bond purchases program may end this year.

Watch the Fed’s December meeting due today at 19:00 GMT. Traders will be hoping for a clear commitment to keeping rates low for a long time to come – without that riskier assets may suffer. There will be also a great focus on American employment data this week. Today watch the ADP employment report due at 13:15 GMT (forecast: 199K; previous: 215K). On Friday don’t miss the NFP (Non-Farm Payrolls) release which will bring serious volatility to the market (forecast: 194K; previous: 203K). This release might actually show how much strength the US recovery has gained.

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