The Currency Converter

US Dollar: A likely negative forecast for the Dollar exchange rate

December 3rd, 2010

The spotlight that has been shining brightly over the Eurozone this week will shift onto the US this afternoon as the release of November’s non-farm payrolls report is announced. The report is forecast to show that payroll was up 140’000 over the month; however this is not expected to make a real difference to the overall unemployment rate which is expected to remain unchanged at 9.6%. After racking up strong earnings growth in 2010, major U.S. manufacturers are expect to set the stage for a slower-paced 2011 when they meet with analysts and investors to lay out their expectations for the coming year. Among others, General Electric, United Technologies and 3M are all set to provide 2011 forecasts shortly. Profit margins across the sector swelled this year as companies that cut costs to the bone during the brutal recession experienced a rebound in sales that helped the Standard & Poor’s capital goods industry index to rise about 14%, more than twice the gains of the broader US Stock market. Analysts expect 2011 profits to rise next year, but not at the same pace as 2010. It is likely that the forecast for the dollar will be negative as the slow recovery and difficult sets of fundamental undermine the currency during these difficult times.

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