US Dollar (USD) Exchange Rate Forecast
As trading began on Tuesday the US Dollar was slightly softer against several of its most-traded currency peers.
In recent weeks the ‘Greenback’ has gone from strength to strength on the back of upbeat US fundamentals and the expectation that the Federal Reserve might bring forward its timeline for increasing interest rates.
However, bets that the asset’s rally may have been excessive saw the US Dollar lose ground before the release of US Consumer Confidence figures.
The GBP/USD pairing was also able to moderate its position on the back of an upward revision to US growth data for the second quarter.
During the North American session the US Dollar extended declines in response to an unexpectedly steep decline in the US Consumer Confidence index. Sentiment was shown to have fallen from a positively revised 93.4 in August to 86.0 in September. Economists had forecast a reading of 92.5.
According a representative from the Conference Board; ‘Consumer Confidence retreated in September after four consecutive months of improvement. A less positive assessment of the current job market, most likely due to the recent softening in growth, was the sole reason for the decline in consumers’ assessment of present-day conditions. Looking ahead, consumers were less confident about the short-term outlook for the economy and labour market, and somewhat mixed regarding their future earnings potential. All told, consumers expect economic growth to ease in the months ahead.’
The Pound Sterling to US Dollar (GBP/USD) exchange rate achieved a high of 1.6287 on Tuesday.
Today US Dollar volatility could be inspired by the nation’s ISM Manufacturing and Markit Manufacturing gauges as well as construction spending figures. Given that the highly influential US non-farm payrolls report is scheduled for publication on Friday, investors with an interest in the US Dollar will also be paying close attention to the ADP Employment Change figure. It is expected that the US economy added 207,000 positions in September, but a surprise result may trigger fluctuations.
Euro (EUR) Exchange Rate Forecast
Yesterday the Euro came under pressure as the Eurozone published yet more disappointing ecostats. While Germany’s year-on-year retail sales figures and the nation’s unemployment change report disappointed, the Eurozone’s Core Consumer Price Index also came in at 0.7% rather than 0.9%, adding to deflationary concerns and supporting the argument for ECB intervention.
Prior to the publication of the Eurozone’s inflation figures, strategist Yujiro observed; ‘It is difficult to build new positions in the Euro Dollar before the European Central Bank meeting. Although it is less likely that the ECB take any action after the surprise easing at the last meeting, Draghi might mention any further action in his speech.’
The Euro lost over 0.4% against the Pound, with the EUR/GBP exchange rate slumping as low as 0.7764. Later today Euro movement could occur in response to final Manufacturing PMI for France, Germany and the Eurozone as a whole. Any significant revisions will have an impact on the Euro.
The Euro to US Dollar (EUR/USD) exchange rate fell to a low of 1.2568.
