The Week Ahead for the USD: June 21-25

The US Dollar pulled back against all of its major counterparts last week. The dominating reason was that the confidence in Euro market was buoyed since Spain announced to sell 3.5 billion euros of bonds at the auction. Compared with optimistic Euro market, the US market released its disappointing import prices for May on last Tuesday.

Overall consensus: Neutral. The US economy keeps on recovering at a relatively stable pace. The CPI and PPI released last week signaled a healthy level of inflation. Also, the rising US stock market showed an improved confidence. Consequently, the USD will not fluctuate too much.

The upcoming week will be dominated by economic indicators, of which the home sales, FOMC statement and GDP seems especially important. Here is the USD forecast for this week (All the following time is US Eastern time).

Monday, 21 June

No major scheduled events.

Tuesday, 22 June

At 10:00 am, the US will release the Existing Home Sales data. As a spark for the US financial crisis’ home sales are playing an increasingly important role in measuring how well the economy recovers. The existing home sales have continued increasing (from 5.02M to 5.77M) since March 2010, and also all the actual data outperformed the forecasts in these three months. The result is likely to be better than the forecast now (6.23M).

Wednesday, 23 June

The busiest day of the week as three important reports are going to be released.

To begin with, at 10:00 the New Home Sales following Tuesday’s existing home sales. The new home sales for March and April were 411K and 504K respectively, and the sales in April reaches a 20 months’ high. Considering the housing starts in May were lower than forecast by almost 10%, the new home sales data for May should also be lower, this is likely to be bad news for USD.

Crude Oil Inventories will be reported by the Energy Information Administration 30 minutes later. The inventories last week are 1.7M.

Later in the day, the Federal Reserve will publish the FOMC (Federal Open Market Committee) statement at 2:15 pm. The previous statement refers to the re-establishment of FOMC’s temporary U.S. dollar liquidity swap arrangement with the Bank of Japan. The statement could have a great impact on the US Dollar crosses, and thus investors should focus on the changes in the FOMC statement

Thursday, 24 June

The Census Bureau is going to release the Core Durable Goods Orders at 08:30 am. The core durable orders decreased 1% m/m in April, and are expected to increase 1.1% m/m in May.

At the meantime, the Department of Labor has to release the Jobless Claims. The jobless claims have been under-expected since the beginning of the April 2010. The previous jobless figure is 472K, and it is expected to be 461K.

Friday, 25 June

One of the most important economic indicators, GDP is scheduled to be released. The GDP increase rate in the third quarter of 2009 was 2.2% q/q and then jumped to 5.6% q/q, and the expectation for the first quarter of 2010 is 3% q/q. If the figure is greater than expectation, it shows that the economy recovery is healthy, thus a good piece of news. Otherwise, it will definitely weaken the US Dollar.

After that, at 09:55 am, University of Michigan will report the Consumer Sentiment. Its forecast for June arrives at 75.5, which is a two-year high. In light of the report published on 11 June by University of Michigan, it has already suggested that consumer confidence rose more than expected in June. Hence, consumer sentiment may outperform forecast figures also.

What Important?

Existing Home sales and the FOMC rate announcement will be the key new events for early on in the week. Core Durable Goods and the GDP will be the market movers for the end.

Key Words for the Week

Existing Home Sales, FOMC, Core Durable Goods, GDP