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Gloomy US consumers to weaken USD?

business-articlesGloomy US consumers to weaken USD?
  • Drop in Eurozone inflation may pressure EUR
  • US consumer sentiment expected to dip
  • Japan expected to post sizeable trade deficit
Euro may be weakened by CPI figures

The euro may find itself drifting lower this morning with the release of the Eurozone’s final CPI reading for February.

Economists predict the final release will fall in line with the preliminary reading and confirm that that bloc’s inflation rate stumbled from 1.3% to 1.2% in February.

This will see the Eurozone inflation rate fall to its lowest levels since December 2016, and will cause the gulf between headline inflation and the European Central Bank’s (ECB) target rate of 2% to grow even wider.

With the ECB already appearing reluctant to wrap up its quantitative easing programme, the slide in inflation will likely do little to inspire confidence that policy makers could implement a rate hike any time in the foreseeable future.

US consumer sentiment to slide?

The University of Michigan will publish its latest consumer sentiment index later this afternoon, with any change in US consumer confidence likely to weigh on USD.

The initial estimate is expected to reveal that the index stumbled from 99.7 to 99.3 this month, with analysts suggesting that the slight dip in optimism may be down to lacklustre wage growth figures in February.

However any losses for the US dollar on the back of these figures are likely to be slight, with optimism still likely to remain high and the index still on track for its third-highest reading since 2004.

JPY poised to slide on trade figures

The upcoming release of Japan’s latest trade figures is likely to prompt a fall in the Japanese Yen at the opening of next week’s session as economists forecast the nation’s trade deficit will have widened last month.

Current data puts Japan’s trade deficit at ¥943bn, which analysts believe is likely to rise to at least ¥1,002bn in February, its worst levels in just over a year.

Conversely some economists forecast that strong export growth will mean that Japan will have returned to running a trade surplus in February, likely helping to bolster the Japanese Yen.

Upcoming Data

Friday, 16 March, 2018
10:00                     EUR Eurozone Inflation
14:00                     USD Consumer Sentiment

Sunday, 18 March, 2018
23:50                     JPY Trade Balance
 
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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