A Crucial Week of Data for the US Dollar
With the dollar struggling in the U.S. on Friday, analysts are speculating over its fortunes for the coming week, and with several key pieces of data to be released it is predicted it will be a volatile time for the dollar.
There were several factors that led to the poor performance of the dollar on Friday, including the newly released figures for personal spending and personal income, which both showed signs of limited growth, and didn’t meet the predicted figures.
However, there are several key sets of data to be released on Monday that will be crucial to the dollar’s performance, including the ISM manufacturing Purchasing Managers’ Index and the trade balance on Wednesday; all eyes will be on the US on Friday with the release of the US Non-Farm Payroll data.
US Non-Farm Payroll Data Report
Of most interest will be the US Non-Farm Payroll data report. An improved economy will be crucial to the Feds December decision on US interest rates, and Hantec Markets predict a December interest rate increase will strengthen the dollar while lowering the price of gold.
It is expected there will be an improvement in the labour market and in employment figures, but the predictions only amount to a minor advancement rather than a vast turnaround in fortunes for the US economy.
The figures for September were disappointing and missed their predictions, leading to some volatility and losses on the market and a fall in the dollar.
Moreover, export orders were shown to be contracting, while orders and employment will growing, albeit at a moderate rate.
US ISM Manufacturing Index
Moving on to the US ISM Manufacturing Index data, the performance is expected to be poor.
US Manufacturing has faced pressure from a number of directions including a weak export market and the strong dollar. Analysts predict a weak performance when the data from the ISM Manufacturing Index is released on Monday, and it is predicted it will only just manage to stay above the 50 expansion/contraction level.
US Factory orders are predicted to make a slight fall of -0.9% and a dip in ISM manufacturing to 49.6 compared to the last set of figures of 50.2 is predicted by Reuters.
Commenting on the imminent release of Monday’s US ISM Manufacturing index, Ilya Spivak, Currency Strategist, at DailyFX, said:
"A drop to 50.0 is expected, amounting to the fourth consecutive deterioration and the lowest reading since December 2012. Realized US data outcomes have cautiously improved relative to expectations in the past month, recent disappointments notwithstanding. That hints at the possibility of a better-than-forecast print, which could build on last week’s hawkish FOMC statement and boost the US Dollar."
Update:
The Dow Jones jumped nearly 90 points higher following a 54.1 reading for the Markit manufacturing PMI (compared to the 54.0 expected) alongside a slightly better than forecast 50.1 for the ISM survey.
"That former figure suggests a promising performance for the sector; the latter, on the other hand, is the lowest number since May 2013, and paints a far less heathy manufacturing picture," says Connor Campbell at Spreadex.
Other Data Points
Other key data to be released in the US this week includes weekly EIA oil inventories, factory orders and unemployment figures. In September, the US unemployment figures held steady at 5.1% and its forecast at for 5.2% for October.
