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Currency Analyst since 2010

US dollar: outlook for August 10-16

By Elizaveta Belugina

When to expect the Federal Reserve’s first rate hike?

The main theme about the US dollar during the past week was certainly the expectations of the Fed’s interest rate increase. As usual, traders were closely following US statistics, which, on balance, was positive. There was a bright piece of data about American services sector: ISM non-manufacturing PMI soared to 10-year high. Manufacturing index fell, but still indicated industry expansion.  

The long-awaited Non-Farm Payrolls rose by 215K in July, which is slightly below consensus of 220K, but still above the critical level of 200K. American unemployment rate remained at 5.3%. Average hourly earnings, as expected, rose by 0.2% after a flat reading in June.

US labor market data keep the possibility of September rate hike on the table. Although it is still a long way to go until September, such expectations will support the greenback in the coming days: the market got the reassurance it needed.

Next week will not be as intense in terms of economic data as the previous one, but still we have some important events in economic calendar. The FOMC member Lockhart Speaks will speak on Monday and it will be interesting how he assesses NFP data. In addition, do not miss unit labor costs on Tuesday as this release is linked to inflation, core retail sales on Thursday and producer prices together with consumer sentiment on Friday.   

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