US Dollar Forecast: Neutral
- US Dollar[1] trimmed gains as Dow Jones[2] and S&P 500[3] rallied last week
- Markets seem to be looking forward to the future despite dismal data
- Coronavirus slowing as states eye reopening, case for stimulus fading?
US Dollar Weekly Recap
The haven-linked US Dollar wrapped up a mixed week as the Greenback trimmed most of its gains into the latter half of the past 5 trading days. Sentiment notably improved on Thursday and Friday as the S&P 500 and Dow Jones pushed higher. On the chart below, you can see the close inverse relationship between the US benchmark stock index with the US Dollar. Sentiment will likely continue driving Greenback price action.
Investors seemed to cheer remarks from US and Chinese officials vowing to implement the ‘phase-one’ trade deal after fears of trade war escalation casted uncertainty[4] into markets. Meanwhile, ebbing coronavirus cases and fatalities kept traders looking forward to a gradual reopening of state economies. New York Governor Andrew Cuomo noted that they are ‘finally ahead’ of the virus.
USD Road Ahead - Markets Missing the Prior Urgency and Tempo of Extraordinary Stimulus?
Thus far, dismal local economic data has been struggling to materially shift the cautiously upward momentum on Wall Street. Last week, the US unemployment rate shot higher to 14.7% as non-farm payrolls contracted a record -20.5 million. Granted, these readings were not quite as dismal as economists were estimating. Jobless claims also rose over 3.1 million in the last week of April as lockdown measures took its toll on the economy.
The markets may be hopeful for the future. Primarily, that growth should pickup on an upbeat tempo, pouring cold water on current mind-boggling data. In Australia, the
