Week of Central Banks, Is It Bullish for USD?

The US dollar ended both the last trading week of August and the month itself with solid gains. Should traders remain bullish on the currency? Analysts do not see reasons not to be.

The first trading week of September started rather quietly as the United States were celebrating the Labor Day. Yet the rest of the week will be anything but quiet. As much as five major central banks will announce policy decisions: the Reserve Bank of Australia, the Bank of Canada, the Bank of Japan, the European Central Bank and the Bank of England. No changes are expected, therefore wording of the statements will be very important as market participants will be trying to guess future moves of the banks. The current policies are extremely accommodative for the most part and absence of change itself is positive for the US currency.

The major event for the dollar (in fact, for other currencies as well) in September will be the policy meeting of the Federal Reserve. It will occur in the second half of the month, but a major indicator will be released this week that should affect the decision:
non-farm payrolls. The employment level is considered to be the key indicator that the Fed watches to assess appropriate time for reducing stimulus. Economists predict that the payrolls will show solid growth, increasing chances for stimulus reduction and bolstering the strength of the greenback. Ahead of the report, unemployment claims and ADP employment data can help traders to gauge the state of the US labor market. These reports are also expected to be positive.

There is also the theme of possible war in Syria. For now, it was put to the background and likely will not play a significant role in the near term. Yet it still may unexpectedly resurface and provide additional benefit for the dollar.

Considering all the supportive fundamentals, it is no surprise that Forex analysts are extremely bullish on USD. DailyFX issued bullish forecast for the currency, while Forex Crunch believes that USD will rise in all the major crosses.

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