Currency Note US Dollar

Worries over interest rates undermine the US Dollar

By Ricky Bean March 23rd, 2015

Friday saw Federal Reserve members Lockhart and Evans speak. Both touched upon interest rate rises which will be under the spotlight for US Dollar, with Lockhart reiterating that an increase in interest rates could be appropriate in the summer or later this year, tying in with the market expectation of a September rate rise. This could give time for oil prices to rebound to previous levels before the recent slumps and also increase inflation towards target levels. Evans said that a delay in a rate increase does not affect the Federal Reserve’s ability to counter inflation, highlighting that inflation is at a low but controllable level.

Another busy week is expected for the US dollar. Monday will see the release of existing home sales data, which is predicting an increase instead of the usually stable figure. Tuesday will see the release of consumer inflation data, which is expected to show a small increase as oil prices also start to rise. Alongside this, we will also see a Manufacturing Purchasing Managers’ Index (PMI) and New Home Sales data on the same day. The Durable Goods orders figure, which shows the value of new purchases placed with manufacturers, is released on Wednesday, with a small increase on the previous month forecast. The weekly unemployment data for Thursday is released, with a stable figure expected compared to the previous week. Final growth figures for the US will be a figure to watch this week, as a slight increase is expected on the previously released figure.

A very busy week for data which will be very carefully scrutinized. Along with this we have various Federal Reserve members giving speeches in which the focus will be on what clues they give as to a possible interest rate rise this year, as well as US Federal Reserve Chair Janet Yellen speaking on Friday evening.