US DOLLAR OUTLOOK: BULLISH
- US Dollar[1] could rise on risk aversion from virus-induced recession scares
- ISM, PMI and nonfarm payrolls data may catalyze surge in the Greenback
- Will the US $2 trillion fiscal stimulus package be enough to restore risk appetite?
US DOLLAR EYEING NONFARM PAYROLLS, ISM, PMI DATA
The US Dollar may rise if manufacturing and services figures from ISM and Markit PMI reports highlight the impact of the coronavirus and cause the highly-liquid Greenback to surge on the back of risk aversion. Nonfarm payrolls data for March will be particularly scrutinized with estimates of a -100k print which would mark the weakest reading since the 2008 financial crisis if the report falls in line with expectations
US Dollar Surging vs Euro, Australian Dollar, New Zealand Dollar, British Pound – Daily Chart
US Dollar chart created using TradingView
The anticipated plunge comes as local governments order non-essential businesses to close their doors and force consumers to self-quarantine. Consequently, this has thrown over three million Americans out of work as shown by last week’s publication of initial jobless claims data[2]. The magnitude of the virus-induced shock will become evident as data for March provides analysts and investors with a clearer picture of the impact.
Here is a breakdown of the key economic indicators that may elicit volatility in US-Dollar crosses:
A slew of consumer-related data will also be released which may warrant the attention of traders given that over 80 percent of the US economy is driven by consumption. Consequently, monitoring indicators relating to the spending habits of the driving engine is imperative. Numerous housing statistics will also be published which may provide more insight into how consumers are feeling about the outlook[3].
