Outlook for the USD Ahead of Key Economic Data

Today will be an important day
for the US dollar as investors will receive important data from the US. This
data should shed light about the health of the US economy. Before the data, the
dollar index has been rising and has moved to the highest level since January
27 as shown in the chart below.

The first data to be released
will be the GDP number for the fourth quarter. The first reading of the GDP is
expected to show that the economy expanded by 2.6%. This may be lower than the 3.4%
growth experienced in the third quarter and the 4.2% growth of the second
quarter. This weakness comes at a time when the gains of the Trump tax cuts
have been realized.

The GDP price index is expected
to show an increase of 1.7%. This may be higher than the previously-released
1.5%. This number measures the annualized change in the price of all goods and
services in the GDP. It is a good measure of inflation in the country.

The country will also release the
retail sales numbers. These numbers are expected to show that the sales
increased by 0.1% in the past month. This might be a point lower than the
growth of 0.2% experienced in the previous month. The core retail sales are
expected to be unchanged. The core number excludes the volatile food and energy
prices.

The core durable goods orders are
expected to rise by 0.2%. This might be higher than the decline of minus 0.3%,
which was reported in the previous month. This number measures the change in
total value of new orders of long-lasting manufactured goods excluding
transportation number. The transport sector is excluded because of its
volatility.

Housing numbers are expected to
show starts of 1.250 million, which might be lower than the previously-released
1.256 million. The housing starts number measures the change in the annualized
number of new residential buildings that began construction in the reported
month. Therefore, an increase in starts might be a good indication of the
strength of the housing sector. The building permits are expected to be at 1.29
million, which might be lower than the expected 1.328 million.

Trade numbers will also be
watched closely. The trade deficit for the country is expected to decrease to
$54 billion. In January, the deficit increased to $55 billion. Increased trade
deficits are the reason why the Trump administration has implemented tariffs.
The key number will be the trade deficit with China.

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