The USD Bound to Climbing Further, As the US Economy Reverses - Forex News by FX Leaders
US ISM manufacturing has come out of contraction, as the economy improves

The USD Bound to Climbing Further, As the US Economy Reverses

Posted Saturday, February 22, 2020 by
Skerdian Meta • 3 min read

The US Dollar has been bullish for the last two years. If you look at the DXY (USD index) below, you can see that it has been climbing since early 2018. It broke above all moving averages on the weekly chart and it seems now that those moving averages have turned into support. The 20 SMA (grey) and the 50 SMA (yellow) have been keeping the USD index up since September 2018.

The 20 and 50 SMAs are keeping the DXY supported

We did see a pullback lower during the Q4 of last year, as the US economy weakened and ISM manufacturing fell in contraction, increasing fears that manufacturing in the US was going to join the Chinese and European manufacturing, which have been in deep contraction for about a year. But, the 50 SMA held well as support and the index bounced off from there during these last two months.

Apart form the technical picture which points up for the DXY, fundamentals are another major reason for the USD to resume the bullish trend so far again this year. The data of the last two months, has shown some considerable improvement in the US economy.

3:45pm
USD
Final Manufacturing PMI51.951.751.7
4:00pmUSD
ISM Manufacturing PMI
50.948.547.2
USD
Construction Spending m/m
-0.2%0.5%0.7%
USD
ISM Manufacturing Prices
53.352.051.7
All DayUSD
Wards Total Vehicle Sales
16.8M16.8M16.7M
TueFeb 44:00pmUSD
Factory Orders m/m
1.8%0.7%-1.2%
USD
IBD/TIPP Economic Optimism
59.858.357.4
WedFeb 53:00amUSD
President Trump Speaks
2:15pmUSD
ADP Non-Farm Employment Change
291K157K199K
2:30pmUSD
Trade Balance
-48.9B-48.2B-43.7B
3:45pmUSD
Final Services PMI
53.453.253.2
4:00pmUSD
ISM Non-Manufacturing PMI
55.555.155.0
4:30pmUSD
Crude Oil Inventories
3.4M2.9M3.5M
10:10pmUSD
FOMC Member Brainard Speaks
ThuFeb 61:30pmUSD
Challenger Job Cuts y/y
27.8%-25.2%
2:30pmUSD
Prelim Nonfarm Productivity q/q
1.4%1.6%-0.2%
USD
Prelim Unit Labor Costs q/q
1.4%1.3%2.5%
USD
Unemployment Claims
202K215K217K
3:15pmUSD
FOMC Member Kaplan Speaks
4:30pmUSD
Natural Gas Storage
-137B-123B-201B
FriFeb 71:15amUSD
FOMC Member Quarles Speaks
2:30pmUSD
Average Hourly Earnings m/m
0.2%0.3%0.1%
USD
Non-Farm Employment Change
225K163K147K
USD
Unemployment Rate
3.6%3.5%3.5%
4:00pmUSD
Final Wholesale Inventories m/m
-0.2%-0.1%-0.1%
5:00pmUSD
Fed Monetary Policy Report
9:00pmUSD
Consumer Credit m/m
22.1B15.2B11.8B
SatFeb 8
SunFeb 9
MonFeb 102:15pmUSD
FOMC Member Bowman Speaks
9:15pmUSD
FOMC Member Harker Speaks
TueFeb 1111:56amUSD
NFIB Small Business Index
104.3103.6102.7
4:00pmUSD
Fed Chair Powell Testifies
USD
JOLTS Job Openings
6.42M6.93M6.79M
USD
Mortgage Delinquencies
3.77%3.97%
6:15pmUSD
FOMC Member Quarles Speaks
8:15pmUSD
FOMC Member Kashkari Speaks
WedFeb 122:30pmUSD
FOMC Member Harker Speaks
3:30pmUSD
Fed Chair Powell Testifies
4:30pmUSD
Crude Oil Inventories
7.5M3.1M3.4M
7:01pmUSD
10-y Bond Auction
1.62|2.61.87|2.4
8:00pmUSD
Federal Budget Balance
-32.6B-10.7B-13.3B
ThuFeb 132:30pmUSD
CPI m/m
0.1%0.2%0.2%
USD
Core CPI m/m
0.2%0.2%0.1%
USD
Unemployment Claims
205K210K203K
4:30pmUSD
Natural Gas Storage
-115B-106B-137B
7:01pmUSD
30-y Bond Auction
2.06|2.42.34|2.5
11:30pmUSD
FOMC Member Williams Speaks
FriFeb 142:30pmUSD
Core Retail Sales m/m
0.3%0.3%0.6%
USD
Retail Sales m/m
0.3%0.3%0.2%
USD
Import Prices m/m
0.0%-0.2%0.2%
3:15pmUSD
Capacity Utilization Rate
76.8%76.9%77.1%
USD
Industrial Production m/m
-0.3%-0.2%-0.4%
4:00pmUSD
Prelim UoM Consumer Sentiment
100.999.599.8
USD
Business Inventories m/m
0.1%0.1%-0.2%
USD
Prelim UoM Inflation Expectations
2.5%2.5%
5:45pmUSD
FOMC Member Mester Speaks
SatFeb 15
SunFeb 16
MonFeb 17
TueFeb 182:30pmUSD
Empire State Manufacturing Index
12.95.14.8
4:00pmUSD
NAHB Housing Market Index
747575
8:00pmUSD
FOMC Member Kashkari Speaks
10:00pmUSD
TIC Long-Term Purchases
85.6B31.4B27.1B
WedFeb 192:30pmUSD
Building Permits
1.55M1.45M1.42M
USD
Core PPI m/m
0.5%0.2%0.1%
USD
PPI m/m
0.5%0.1%0.1%
USD
FOMC Member Mester Speaks
USD
Housing Starts
1.57M1.40M1.63M
5:45pmUSD
FOMC Member Kashkari Speaks
7:30pmUSD
FOMC Member Kaplan Speaks
8:00pmUSD
FOMC Meeting Minutes
ThuFeb 202:30pmUSD
Philly Fed Manufacturing Index
36.710.117.0
USD
Unemployment Claims
210K210K206K
4:00pmUSD
CB Leading Index m/m
0.8%0.4%-0.3%
4:30pmUSD
Natural Gas Storage
-151B-143B-115B
5:00pmUSD
Crude Oil Inventories
0.4M3.3M7.5M
FriFeb 213:35pmUSD
FOMC Member Kaplan Speaks
3:45pmUSD
Flash Manufacturing PMI
50.851.551.9
USD
Flash Services PMI
49.453.353.3
4:00pmUSD
Existing Home Sales
5.46M5.46M5.53M

 

As you can see from this month’s economic data from the US, most of the important numbers are green. Factory orders have been negative in the last four months of 2019 but they posted a nice jump of 1.8% for January. Services and ISM non-manufacturing improved as well and moving away from contraction, while jobs posted a major increase. The UoM consumer confidence jumped higher, as did the Empire State manufacturing index and the Philly FED manufacturing index.

ISM manufacturing also posted a 3.7 point jump, leaving behind contraction after 5 months there. So, manufacturing didn’t fall in recession in the US like in Europe. So, the economy is improving in the US, which should keep the USD bullish. Besides that, we have heard FED members sound less dovish, like Bullard who is a dove naturally. So, no more rate cuts from the FED, which should add more strength to the USD.

 

 

 

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