US Dollar Still Faces Challenges in the New Year?

After Christmas, the market gets busy again. Despite the somewhat gloomy previous figures, the first phase of China-US trade agreement had brought some feel-good factors for Christmas. But after the holiday, the market will again face down-slope risks in US dollar which may continue to be the markets theme in the following months.

A trade war hurts both China and the US, so a truce between the two countries will definitely boost market confidence, but that optimism needs to be backed by concrete economic situation, which obviously takes more time to recover. Little economic data was available around Christmas, but data released on Monday still indicates economic slowdown in the US. Key economic indicators in the US appear weak near the end of the year. Though the market expects all major economies around the world to avoid recession in 2020, US economy can face further slump before a rebound.

The US Durable Goods Order released on December 23rd dropped unexpectedly, which weighed down on other manufacturing indicators. Although new home sales rose percentagewise, but in absolute sense the number of new homes sold in November had declined compared with that of October. All these weakening figures suggest the USD faces considerable risk of falling back in 2020.

Besides, political uncertainty in the country may also affect the market‘s response to the US dollar. President Trump becomes the third president in US history to face an impeachment. Although it’s less likely the impeachment will actually succeed given the majority of seats taken by Republicans in the Senate, the incident still puts US dollar in a test.

As for currency pairs, the Canadian dollar also declined after its GDP softened. Canadian dollar remains in a strong momentum, but if domestic economic indicators remain sluggish and US economy continues to slow down, the Bank of Canada, which hadnt cut interest rate in the past few months like many other central banks, will adopt easing policy in 2020. Pound sterling sell-off extends, euro is rallying while Australian dollar and New Zealand dollar continue to rise. But after the previous sell-off, AUD and NZD are considered ideal choices for pocketing profits at the end of the year.

Time flies and the year comes to an end, WikiFX once again accompanied investors throughout the cycle of changing seasons. In the past 2019, WikiFX has always been committed to providing investors with comprehensive broker information and timely forex updates and market trends. For the upcoming 2020, WikiFX will continue to bring investors even better experience through constant innovation and introduce more new functions. Please stay tuned.