USD: forecast for June 29 - July 5
Economic data released in America during the past week was mildly encouraging for the greenback. According to the revised figures, the US economy contracted in Q1, but not as strongly as initially estimated. American housing market showed improvement, while consumer spending recorded its largest increase in nearly 6 years in May, further evidence that economic growth was accelerating in Q2.
However, we didn’t see big moves in USD as trading activity plunged because of uncertainty about Greece.
Once a solution in Greece is reached, traders will switch back to the monetary policy divergence. This should help the US currency strengthen against the euro and the Japanese yen as despite cautious comments from the Federal Reserve this month, the market still expects it to raise borrowing costs sometime toward the end of the year, long before central banks in Europe and Japan make similar moves.
Next week we’ll be once again looking at the most volatile component of the US labor market – Non-Farm Employment change indicator which will be released on Thursday. Also watch American consumer confidence on Tuesday and ISM Manufacturing PMI on Wednesday.