The US dollar was slightly weakening in a trading happened at the beginning of the week. The concerns about Evergrande is rising again after the Hongkong stock exchange stopped the company’s stock.
When this news was released, the index of dollar (DXY) moved around the level of 94.05. That means it was weakening by 0.02 percent from the daily open level price.
Investors are making profit taking to digest the impact of the continuing Evergrande crisis which is feared to hurt the Chinese economy and have a systemic impact globally.
There is a bit of growing nervousness among the market participants even as they think that the risks from Evergrande's problems can be addressed. That can be seen in the market.
How to Solve the Concerns
This is part of a wall of concerns that investors could eventually go through if the COVID-19 pandemic can improve, growth stabilizes, and concerns about inflation ease.
However, at the moment, overall market sentiment is still quite gloomy. That statement was given by Moh Siong Sim As the analyst at Bank of Singapore. How about the technical analysis.
Technically, the decline in the U.S. dollar index this morning actually continues the correction that has been formed since the end of last week. After hitting a 1-year high of 94.50, DXY did weaken.
It is as the United States bond yields declined. The US dollar is also observed to be weaker against some commodity currencies such as the AUD and NZD based on the data.
The NFP Data Release Will Become the Next Focus
The commodity currency above will face the RBA and RBNZ interest rate announcements this week. Against the Canadian Dollar, the USD moved bearish as oil prices are currently stable.
The oil price is near their highest levels since October 2018. Furthermore, the Investors' attention will next be on the NFP report on Friday. That announcement has an essential role.
A good data release would be able to reinforce the Fed's tapering prospects that are most likely to be done in November. The final result is awaited by so many people.
The growing question right now is whether any (NFP) numbers are changing the Fed's view on the asset purchase reduction program in November or not.
It is also what the truly weak or strong numbers mean amid a backdrop of fear over stagflation. This statement was said by Chris Weston as the Pepperstone's chief market analyst.
The USD is Now Bearish
After falling at the end of last week, the US dollar slumped further in the trading session Monday (04/October) night. That major currency index fell by 0.3 percent to 93.77.
That was happened when the news broke, heading for its lowest level since Sept. 29. Investors were on the defensive situation ahead of the release of America’s employment data on Friday.
In addition, the trading volume in the forex market is low because some markets, including the Chinese one, are closed in the framework of a national holiday. There is also no high-impact US economic data scheduled.
Therefore, the market anticipation of the release of Non Farm Payroll (NFP) becomes the catalyst of the current Dollar. The analysts gave their predictions.
The Fed May React is the NFP is Bad
The united States NFP is expected to increase from the previous month. A Reuters poll estimated that there will be around 488,000 job additions in September.
The Employment Data in the America is one of the most influential reports for the central banks there in determining the policy. The Fed has signaled that they will start reducing monthly bond purchases.
The most reasonable time is as soon as November. However, the markets are concerned that if the United States employment data disappoints, the plan will be delayed.
