The U.S Dollar is Still Under Pressure by Angelo Airaghi [Guest Analyst]

Household activity could remain moderate for some time, since unemployment and debt rate are high in the United States. Inflation is near the low, but prices are going to heat up again over the medium term.

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U.S.: household’s spending mild.

The U.S. dollar has resumed the downtrend against major currencies and the decline should continue over the medium term supported by fundamental and cyclical factors. In the United States, the public debt is increasing, the global economy is improving and interest rate differentials with key countries are widening. Inflation remains modest for now, it moved 0.2% in September, but it is expected to increase in the coming months, as the declined determined to the lack of request appears to be fading. As a result, commodity prices are preparing to move higher, while the speculation about an up-move of interest rates is mounting. In reality, it might take some time before rates will be on the move again in the U.S. and in Europe. Nonetheless, the domino’s effect set last week by the Reserve Bank of Australia appears to be in motion, along with cyclical and technical components that favors a weaker green back. With the economic growth in process, the U.S. dollar is no longer the safe haven currency. For the third straight month in a row, in September, the U.S. industrial production rose 0.7% (-0.3% expected) from August + 1.2%. Manufacturing production moved up 0.9% supported by autos and parts production, which rose 8.1% from 6.1% in August and 17.1% in July. However, output improved 0.5% excluding the auto components.