March 26, 2023
US Dollar and market outlook.
Hot Forex Review

US Dollar and market outlook.

Economic data released last week and this week so far, show that the economy in the US is strong enough to withstand more hawkish policies. These data also presented an overall optimistic economic outlook, that helps the US dollar, especially when we can see much more weakness and risks in other major economies, mostly in Eurozone and United Kingdom.

Economic data say that this healthy economy can withstand more pressures

US Flash Services and Manufacturing PMI data published last week were much better than expectations and considerably higher than last month’s values. US Unemployment claims were lower than anticipated, dropping to 213K from 220K forecasted last week, while this week, it continued to drop even more by only 193K applications, with downwards revisions in last week’s number, which dropped to 209K from earlier estimate of 213K. Trade Balance data released last Thursday also exceeded expectations. These positive economic data reflected the US CB consumer confidence to improve 108 in September from 103.6 in July. Thursday’s DGP and Tuesday’s housing data also confirmed the good condition and strength of the US economy. In short, we can say that the US economy is expanding, and it is what we could hear in the FOMC members’ speeches, especially Fed Chair Powell’s speeches on the 27th and 28th, saying that we do still have room to go for more tightening policies.

Fed Chair Jerome Powel stated that the Fed is determined to curb inflation, even at the expense of economic growth and possible negative costs for US consumers. Therefore, we expect future rate hikes and tightened monetary policies. Effects of these policies are reflected in Bond Yields and the US dollar index growing to new levels high.

With these data from the US, and while economic data released from other economies are getting even weaker, the US dollar still can hold its demand and its current levels, with an uptrend tendency.

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