We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Mixed
GBP/USD
Mixed
USD/JPY
Bullish
Gold
Bullish
Oil - US Crude
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Bitcoin
Bearish
More View more
Real Time News
  • Russian Energy Minister Novak says he has no information about possible discussions of deeper oil production cuts at the December meeting #OOTT
  • Join @PaulRobinsonFX 's #webinar at 5:30 AM ET/9:30 AM GMT to gain insight on indices and commodities for the active trader. Register here: https://t.co/gghsFsZYlx https://t.co/J1ShHzXFU4
  • #Silver is a precious metal commodity that investors use as an inflation hedge and safe-haven asset. Find out what are some strategies and tips to trade silver here: https://t.co/f67gnRUGoo #CommoditieswithDailyFX https://t.co/Blj2PaJZVz
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 96.03%, while traders in US 500 are at opposite extremes with 76.58%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/YBa3o6HUml
  • Commodities Update: As of 07:00, these are your best and worst performers based on the London trading schedule: Gold: 0.25% Silver: 0.20% Oil - US Crude: -0.57% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/k4lIb74AX4
  • Forex Update: As of 07:00, these are your best and worst performers based on the London trading schedule: 🇯🇵JPY: 0.13% 🇬🇧GBP: 0.10% 🇨🇭CHF: 0.03% 🇨🇦CAD: -0.02% 🇳🇿NZD: -0.11% 🇦🇺AUD: -0.24% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/SEL9ZfqXwT
  • RT @BChappatta: *KUDLOW: UNRESOLVED ISSUES IN PHASE 1 COULD SPILL INTO PHASE 2 this is farce
  • Why financial market traders must monitor both monetary and fiscal policy?Find out from @MartinSEssex here: https://t.co/Fkzk88Y5gm https://t.co/chL9NmEE6T
  • Indices Update: As of 07:00, these are your best and worst performers based on the London trading schedule: Wall Street: -0.13% US 500: -0.20% Germany 30: -0.55% France 40: -0.62% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/68ZM5scRYu
  • German Finance Minister on Brexit Extension- Pushing Back the Data by Two or Three Weeks to Allow Ratification Will Rather Not Be a Problem- Reuters
US Dollar May Gain if IMF Report, US GDP Data Fuels Haven Demand

US Dollar May Gain if IMF Report, US GDP Data Fuels Haven Demand

2019-07-20 12:00:00
Dimitri Zabelin, Junior Currency Analyst
Share:

DXY Price Chart

US DOLLAR FUNDAMENTAL FORECAST: BULLISH

  • US Dollar may gain on risk aversion if US GDP data undershoots forecasts
  • USD spike may be amplified if IMF report shows fragility in global economy
  • Will USD strength from higher liquidity demand crush rate cut expectations?

See our free guide to learn how to use economic news in your trading strategy!

The US Dollar will likely experience higher-than-usual volatility in the week ahead as the IMF prepares to publish its updated outlook for the world economy along with the release of critical US economic data. Depending on the nature of the data, if it falls in line with the fundamental trajectory of slower growth and increased risks to the financial system, the US Dollar may experience capital inflow from panicked investors.

The biggest event risk for the week will likely be the release of US Q2 GDP data. The report is expected to show a quarter-on-quarter annualized growth rate of 1.8 percent which would mark the slowest pace of expansion since Q1 2017. Since February, economic data out of the US has been tending to underperform relative to economists’ expectations. It would not be surprising to see GDP data fall in line with this trend.

Are Economists Overestimating the Strength of the US Economy?

US

Note: Data shown in red indicates underperformance, blue means better-than-expected

US Dollar strength may also emerge from the publication of the IMF’s World Economic Outlook update, the title of which in January was “A Weakening Global Expansion”. Given the trajectory of global growth and tense trade relations in developed and emerging markets, it is likely the updated outlook will carry the same pessimistic undertones outlined in January’s report. Only this time, the gloom and doom may be amplified.

With market participants already expecting slightly lower-than-even oddsof a 50 bp cut at the FOMC meeting in July, it leaves increasingly less room for additional dovish expectations. If GDP data undershoots and the IMF report spooks investors, the US Dollar may rise as traders shift from chasing yields to preserving capital. As such, the downward pressure of Fed rate cut bets may be overwhelmed by the desire for liquidity in uncertain times.

Chart Showing US Dollar Index and Implied Federal Funds Rate for January 2020

EURUSD

US DOLLAR TRADING RESOURCES

--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.