Short-Term Outlook for US Dollar

The holiday period in the United States has ended, and economic data from the USA will be released to the markets again. Let us see what factors will be affecting the US dollar over the next few days and what can be expected by traders from the US currency.
There will be several important reports released during this trading week. Among them retail sales data, jobless claims and the consumer confidence. Yet perhaps the most important of them will be the inflation report. Analysts predict that the Consumer Price Index for September will show a drop by 0.2 percent following the 0.1 percent decline in the previous reporting period. On a positive side, the core components of the index are expected to maintain 0.1 percent growth. Still, the threat of deflation does not bode well for the dollar.
Of course, the major factor for the greenback remains the outlook for timing of an interest rate hike from the Federal Reserve. At present, it is negative for the currency as with each passing day traders lose faith in the Fed’s ability to start monetary normalization this year.
Yet even with all the negative factors, analysts are moderately bullish on the US dollar. Daily FX provided a couple of reasons for the optimistic attitude. Firstly, the absence of monetary tightening has already been priced in and is not likely to drive the currency down too much. Secondly, other currencies have their own detrimental factors that should prevent them from capitalizing on the dollar’s problems.
Forex Crunch was neutral on the dollar against the Australian and New Zealand dollars, bullish against the Great Britain pound, the Japanese yen and the Canadian dollar, and neutral to bullish versus the euro.

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