The dollar showed a fluctuation value several times. This main currency got up because of the Federal Reserve stated that they are quite optimistic about future trading. Meanwhile, the USD has been reported to slump again this week. How can it be?
The US dollar weakened in early European trade last Friday. It is because this main currency is weighed down by disappointing employment and housing data released by the US. The two data indicate that the related aspects do not show a significant increase.
The Dollar Index, which tracks the greenback against six other currencies, was down 0.2% at 92,823. Meanwhile, EUR/USD was up by 0.2%. On the other hand, USD/JPY is mostly flat at 104.70 but is still considered to be on track for a 1.5% gain during the week.
Unemployment Claims Data Not As Expected
Employment data, released on Thursday, showed that initial jobless claims fell less than expected. At the same time, figures from the housing market show that this part of the economy is cooling. It happened after three months of experiencing a very big rebound.
So, while the US economy is showing a recovery again in the market, the rebound appears to be moving on a slower basis. This prompted the Federal Reserve to pledge to keep interest rates near zero at least until the end of 2023.
However, the central bank is also asking for more financial assistance from Congress. It seems this is still impossible to do. It is as long as the market is expecting an economic rebound (the second wave of lockdown and a fiscal response will take effect here).
So many analysts will say that the real yield is negative. This situation will keep the dollar's downward trend going. Meanwhile, it is clear that investors will use position adjustments to reset the dollar into short positions. This is what ING's Chris Turner wrote, in a note.
US Tech Stocks Are Defeated
Apart from the two data above, many parties also keep an eye on US technology stocks. This sector is expected to be able to show its contribution, especially to strengthen the dollar value. Unfortunately, the opposite happened in the market lately.
The stock is considered to have grown not in accordance with expectations. Additionally, US tech stocks took another beat on Thursday with the Nasdaq composite index falling as much as 1.3%. This situation contributed to the weakening of the dollar.
In order for the USD to regain its uptrend, the market needs to ensure that US stocks take a break from correcting stock prices. It was disclosed by Mizuho Securities head of currency strategy, Masafumi Yamamoto, in a Reuters report some days ago.
The State of Other Sectors in the Market
Elsewhere, the GBP/USD currency fell for about 0.1% to 1.2964. This came despite retail sales rising 0.8% in August, slightly above the 0.7% forecast. However, these numbers may change again since several different news and situations can happen in future trading.
Apart from the main sectors as reported above, several commodities are still the concern of investors and traders. It is because some sectors are enjoying a much faster rebound than most economies which are happened globally. This situation must be considered in detail.
However, the sterling's focus is elsewhere as policymakers at the Bank of England indicate different things. On Thursday that they are considering using negative interest rates. They may continue to use this kind of rule. Why? There is the main reason for this.
It is as the central bank braces for the possibility of the British government failing to reach a trade deal with the European Union later this year. They have prepared steps and strategies to be carried out in the future.
