The US Dollar (USD) ended the week broadly higher against the majority of its most traded peers including the Pound (GBP), Canadian Dollar (CAD) and Euro (EUR) as positive durable goods data increased expectations that the Federal Reserve will tighten monetary policy.
As the week drew to a close the USD/EUR exchange rate was trading in the region of 0.744 and the USD/GBP exchange rate traded in the region of 0.588.
Support for the ‘Greenback’ began on Thursday after the latest jobless claims data showed a sharp fall in the number of Americans filing for unemployment benefits.
The decline increased speculation that the labour market in the world’s largest economy was continuing to strengthen.
Any hint of positive economic news out of the US is now likely to bolster the currency after Federal Reserve Chair Janet Yellen recently hinted that the central bank could soon tighten its monetary policy if the economy continues to show signs of improvement.
On Friday the US Dollar received further support after a report released by the Washington based Commerce Department showed that orders for durable goods rebounded in June.
According to the report, demand for durable goods increased by a seasonally adjusted 0.7%. A durable good includes things like airplanes, cars and other long-lasting or heavy machinery.
The figure was higher than the 0.5% increase widely forecast by economists.
US Dollar Forecast for next week
The run of positive data releases for the US economy is likely to continue to offer support to the ‘Greenback’ at the start of the week. Monday sees the release of the latest pending home sales and Dallas Fed Manufacturing Index data, positive readings for those will add to the optimism that the US economy is picking up momentum.
Wednesday sees the publication of US GDP and ADP employment change data.
Following the previous reports sharp fall economists are expecting the economy to have regained all of the ground lost in the first quarter and rise to 2.9% for the second quarter.
If the figure comes in better than expected than the US Dollar is likely to strengthen broadly and push higher against the Euro.
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