Good Week for US Dollar Despite Troubles with US Economy

The US dollar performed rather well against other major currencies this week, despite the concern for the US economy. In fact, actually the concern for the economic growth was one of the reasons the other currencies fell versus the greenback.

The major market driver this week was the statement of the Federal Reserve that the US economic growth would be “more modest”. Together with the unexpectedly increased US jobless claims it caused a bit of a panic on the markets, with huge sell-off by of the riskier currencies the traders. The data from Europe improved the sentiment somewhat, but for a very short time and its impact on the currencies’ market was quickly overshadowed by the strong pessimism among the investors.

In this environment of gloom the Japanese yen could easily outperform the US currency as the safe asset. But the speculation that the Bank of Japan would intervene to limit the yen’s appreciation hasn’t allowed the Japanese currency to rise very much. In general, this week was quite good for the dollar, especially compared to the previous week.

EUR/USD was falling for the whole week and dropped slumped from 1.3288 to 1.2752. GBP/USD was also declining, and only on Friday manged to rise a little; the currency pair fell from 1.5984 to 1.5591. USD/JPY weakened on Tuesday and Wednesday, slipping as low as 84.73, but over the week it rose from 85.37 to 86.28.

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