The economists’ sentiment was positive lately due to the rally of global stocks, the rise of crude oil and the relatively positive trade balance report from China. Yet in a surprising twist, this was helping the US dollar, not hindering it.
Usually, the US currency firms during times of troubles and softens when traders feel optimistic. But today the greenback was behaving in an opposite manner. The reasoning was that the good news would encourage the Federal Reserve to continue monetary tightening. Previously, the Fed was voicing concern that slowing global growth may result in slower pace of interest rate hikes.
Wednesday’s economic data from the United States was rather bad, but it had barely any effect on the dollar. Now, traders wait for tomorrow’s releases of inflation and unemployment claims reports.
EUR/USD plunged 1% from 1.1384 to 1.1273 as of 20:55 GMT today. GBP/USD dipped from 1.4274 to 1.4204. USD/JPY rallied from 108.54 to 109.36.
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