USD Daily Updates

19 January 2018

The US dollar is again weaker this morning. Looking at the currency against its major global peers, the buck is currently weakening against the euro, the British pound, the Japanese yen and the Australian dollar. Looking at the latest economic data, new jobless claims were better than expected while housing starts and building permits were lower than previous figures. Strong economic data has had a limited impact on the dollar in recent history. In other news, the US House of Representatives passed a bill yesterday to extend the government's funding until February 16. For the bill to come into effect, the Senate must approve the bill in a vote later today. The possibility of a US government shutdown is not widely seen as a high probability event. Our short-term and medium-term outlook on the dollar remains bearish.   

USD/JPY is down today and currently trading above 110.80. EUR/USD is up and is trading above 1.2260. The pound is up, and GBP/USD is currently above 1.390. 

Looking at economic data this week, markets will be watching industrial production and housing-related data. Industrial production (0.9% vs. 0.4% expected) and capacity utilization (77.9% vs. 77.3% expected) both beat estimates. The NAHB housing market index (72) met expectations. Housing starts (-8.2% vs. -3% prior) and building permits (-0.1% vs. -1.4%) were lower than previous figures. Initial jobless claims (220k vs 250k expected) beat expectations while the Philly Fed survey (36.2 vs. 38.5 prior) was lowr than previous estimates. Last week, core CPI was slightly ahead of expectations. 

Updated 
Short term outlook
Bearish

As the dollar weakens thanks to strong GDP growth outside the US, we are downgrading the dollar to bearish. Note that the currency is looking oversold in the short-term time frame. Our analysis is based on various technical indicators when looking at a daily chart of the US dollar index. 

Medium term outlook
Bearish

Following the holiday season sell-off, we are downgrading the US dollar to bearish. The currency is neither overbought nor oversold today, and trades within a normal range. This is based on technical indicators when looking at a weekly chart. 

Updated