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USD may tumble on spending figures, New Zealand trade deficit expected to narrow

business-articlesUSD may tumble on spending figures, New Zealand trade deficit expected to narrow
  • US personal spending tipped to slide
  • NZD may strengthen on trade figures
  • Japanese unemployment expected to hold at 24-year low
US personal spending forecast to dip

The US dollar may continue its run of losses at the start of this week’s session, with the release of the latest US personal spending figures.

Current forecasts suggest that today’s data will show personal consumption expenditures in the US will have slowed from 0.6% to 0.4% in December.

Any drop will likely be down to consumers tightening their belts last month after splurging in the Black Friday sales in November.

With consumer spending accounting for roughly 70% of economic activity in the US, a possible downturn at the end of last year is likely to weigh heavily on the US Dollar.

NZD likely to strengthen if trade deficit narrows

New Zealand will publish its latest trade balance figures later this afternoon, with an expected narrowing of the domestic trade deficit likely to strengthen the New Zealand dollar.

After ballooning to – NZ$1.193bn in November, economists forecast the domestic trade balance will have shrunk to just –NZ$0.174bn at the end of last year.

Such a result would leave the deficit above the long-term average of –NZ$0.052 but will still see New Zealand’s trade balance at its best levels since July.

However given that November’s trade deficit was significantly worse than expected a similar performance in December could see the ‘Kiwi’ tumble.

Robust employment figures likely to bolster JPY

The Japanese yen may also find some gains later this evening as Japan publishes its latest employment statistics.

Analysts expect December’s figures to show the unemployment rate held at a 24-year low of 2.7% as the country’s economy continues to expand.

This will place it just below the long-term average of 2.73% and keep the country close to ‘full employment’.

However even if the figures come in as expected it is unlikely to prompt a response from the Bank of Japan (BoJ) as it continues to struggle stimulating inflation, meaning that any gains for JPY may prove to be somewhat limited.

Upcoming data

Monday, 29 January, 2018

13:30                     USD Personal Spending   
21:45                     NZD Trade Balance
23:30                     JPY Unemployment Rate
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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