This week has seen continued strength from the US dollar. Monday was a positive day for the currency, thanks to as Existing Home Sales data, which improved on the previous month, and Federal Reserve Member Fischer confirmation that a rate lift off is probably justified before the end of 2015 – although he emphasised that this would only be if the Federal Reserve are reasonably confident on inflation figures. Inflation did move in the right direction on Tuesday, showing a positive increase for the first time since September 2014. Manufacturing Purchase Manager’s Index (PMI) showed consecutive growth in the Manufacturing sector, and this was followed by another Federal Reserve Member Williams reiterating that it is appropriate to discuss raising interest rates by mid-year.
This positive start soon began negative on Wednesday, when durable goods orders were negative – showing a slowdown in orders placed by consumers – and Federal Reserve member Evans advised against a 2015 rate hike, instead backing a 2016 rate increase. The US dollar returned to positive ways thanks to positive weekly Unemployment claims, which dropped on the previous month, and Service Purchase Manager’s Index (PMI), which showed continued growth in the Services sector. Another Federal Reserve Member, Lockhart, spoke on Thursday, touching on his belief that the US can begin to move out of loose monetary policy measures and into the normalisation of interest rates, and that the Federal Reserve do not intend to intervene as the US dollar continues to strength and hit US exports.
The spotlight of the week will be on the Final US Gross Domestic Product figures for quarter 4 of 2104; in this, it is expected that the initial release will be revised up , supporting the US Dollar even further. Federal Chair Yellen and Member Fischer will also speak throughout Friday, with a focus on Interest Rates and Inflation.