The focus is back on the US this week, with a raft of key economic data releases, along with President Trump’s State of Union address on Tuesday at 9pm EST. We also have current Fed Chairlady Janet Yellen’s last speech before she steps down and hands the reigns over to Federal Governor Jay Powell.
The key to both events is likely to be tone. President Donald Trump’s speech is likely to be more inspiring than his speech to the World Economic Forum in Davos last week. Last week’s comments helped to strengthen the Dollar in what was a pretty diabolical week overall for US dollar exchange rates.
The Dollar has gained against most of its counterparts in anticipation of a powerful speech, where key topics such as the US economy, investment and immigration are expected to be discussed.
Our economy is better than it has been in many decades. Businesses are coming back to America like never before. Chrysler, as an example, is leaving Mexico and coming back to the USA. Unemployment is nearing record lows. We are on the right track!
— Donald J. Trump (@realDonaldTrump) January 28, 2018
Key week for US Data
There are also a number of key economic data releases that could also affect the US Dollar’s value. Today’s personal income growth figures showed a positive increase and finished the year on a high and will eventually help Americans to keep up with the cost of living. This will likely boost expectations that the American economy and consumers can survive 3 further rate hikes this year and will likely feed into Dollar strength.
On Wednesday, the interest rate decision and subsequent monetary policy meeting is set to take place. Currently the chances of an interest rate hike are almost 0% at this month’s meeting and focus will be turned to the minutes for guidance on future developments. I would expect this event to be a relative non-mover for USD exchange rates unless something drastic takes place. The Dollar’s strength today is a sign the markets aren’t expecting much to happen.
The first Friday of the month brings with it a new set of payroll data to provide an insight into the strength of the US economy. The markets move on rumours and this month’s release is expected to show an increase of around 180k for the previous month, and for unemployment to remain largely unchanged. If this figure deviates from what is expected, expect some fireworks for the end of the week.