USD is approaching the turning point
By Elizaveta Belugina
USD bulls have improved their position in the recent weeks. US dollar index (DXY) reached the highest levels since the beginning of February. Next week America will release GDP for the second quarter (forecast: +2.9%) and Non-Farm Payrolls data (forecast: +more than 200K). So far economists expect good data and this is quite encouraging for the greenback. A report showed yesterday that US jobless claims unexpectedly fell to the lowest level in more than 8 years. According to Credit Agricole, the macroeconomic picture is still supportive for USD and American currency will gain momentum in September.
On Wednesday, July 30, the Fed will announce its next policy decision. Although last week the Fed’s Chair Janet Yellen said that the US still needs accommodative policy, she also notes that “if the labor market continues to improve more quickly than anticipated,” US rates may rise sooner than forecast. This means that Yellen is not entirely dovish – a thought which makes traders more optimistic about USD. Analysts at RBS think that we’re getting to the turning point in USD as American yields start to tickle higher.
Still, some experts point out that the market is within ranges right now and a big shift in the US data is needed to really change the market’s perception of the Fed’s tightening pace. To be fair, American data released this week weren’t entirely positive: core CPI, manufacturing PMI and existing home sales were lower than expected.