A number of key fundamental releases are set for release in the US throughout the European afternoon session that could have far-reaching effects across the US majors and crosses. Here are the ones to watch, and their likely impact on the value of the US dollar.
First up is the initial jobless claims release, which reveals the number of individuals that filed for unemployment insurance during the week preceding the release. Consensus forecasts the figure at 317K, a gain on the previous release of 311K. A higher than expected release would likely throw up USD weakness, not just because of the data’s inference but because of its potential delaying impact on a US interest rate hike. The USD dropped against its major counterparts on Monday as Fed Chair Janet Yellen delivered a distinctly dovish speech that suggested any rate hike (which she had alluded to in a speech a week earlier) would have to be supported fundamentally. Therefore, any unemployment data that suggests trouble in the US economy would likely delay any raise, and could cause a selloff in the USD.
The second major release is the latest trade balance figure. Yen devaluation on the back of extremely low rates continues to weigh on the US manufacturing export industry, which when combined with strengthening domestic production, suggests a widening trade deficit. Consensus however, forecasts a tightened deficit 0f-38.50B, versus a previous figure of 39.10B. As with the previous figure, a miss would likely weaken the USD against its major counterparts.
Finally, and probably the headline, is the ISM non-manufacturing PMI release. Consensus hints at an improvement, with the data forecast at 53.5 versus a previous release of 51.6. The impact of this release is similar to that of the aforementioned employment data, with any sign of a decline in the domestic manufacturing sector potentially delaying an interest rate hike. For this reason, a miss will likely weaken the USD, while a better than expected release should offer up some USD strength.
To contact the reporter of this story; Samuel Rae at Samuel@forexminute.com