A busy week ahead for the Greenback with key data releases due Tuesday, Wednesday and Thursday which are likely to add further pressure to an already weakening currency.
USD has weakened against a basket of currencies including GBP, EUR and AUD and this week’s US data releases could see further losses ahead of the big event – the US Election.

What’s the cause of USD weakness?

When Janet Yellen – The Fed’s chairlady – announced four Interest rate hikes in 2016 investors around the globe were under the impression that the US economy was booming. Given that the USD is already seen as a safe-haven currency, the opportunity for 4 hikes was a welcome bonus at a time of global economic uncertainty.

Yellen announced back in March a downgrade from the four planned hikes to just two this year, stating that it was necessary due to global economic uncertainties. At the time of writing we’re still waiting for the second hike to be made.

Then of course there is the US Presidential election which is proving to be one of the most controversial yet. In the blue corner we have Hilary Clinton, who has a long history of economic and political expertise and in the red corner – Donald Trump, making headlines for controversial comments and an infamous background as a businessman. Elections do tend to cause volatility with currencies but there is no doubt that Trump has added further concerns.

Investors are starting to unravel the priced in four rate hikes as they are beginning to look less and less likely to happen. Coupled with the potential for a President Trump only adds further spanners to the works given his unpredictable nature.

All eyes on the Fed decision on Wednesday?

The outcome of Wednesday’s Rate decision will unlikely impact the Dollar given that the majority of Investors are prepped for a no-change, with a 20% chance of a hike in June, days ahead of the EU Referendum.

If anything, the big event to look out for is on Thursday, annual US GDP figures will be a good indicator of overall US economic health and will pave the way for further confidence of an Interest Rate hike in June.