What happened to the US dollar this week, the currency was trading as high as 80.61 just days ago, but is now under the 80 price at 79.88 taking a serious fall? The greenback has been climbing steadily since Janet Yellen mentioned a possible interest rate increase in 2015 at the FOMC press conference. Since then, forex traders have been evaluating data to see if the Fed would continue their tapering program or ease it back. As the severe winter turned into spring economic data and the overall US economy has shown a strong recovery. This past Friday, the US nonfarm payroll report slightly missed expectation by only 5K jobs but the prior months revision showed an additional increase of more than 20k jobs. Some see this very positive report while others keep harping on the negative. Fed speakers have been doing the circuit trying to explain the interest rate scenario which is just confusing everyone. Several point to the fact that unemployment remained the same at 6.7% while others say that the economic situation does not call for a rate increase in the near future. Today, the FOMC minutes will be released which traders are hoping will clarify just what the Fed members were thinking and saying behind closed doors a few weeks ago.
A report from the IMF caught forex traders’ attention yesterday. Stronger U.S. growth this year and next will help the world economy withstand weaker recoveries in emerging markets including Brazil and Russia, the International Monetary Fund said. The U.S. is providing a “major impulse” to global growth that’s still lumbering amid weakness in Japan and parts of Europe, the IMF said in a report
Against the euro the dollar is trading at 1.3792 after seeing the euro climb above the 1.38 level earlier in the day. There was little supportive data on Tuesday as traders continue to monitor comments from ECB members. Today German Trade numbers will be out and there might be an imbalance due to the strength of the euro.
Across the pond the best performed was the Great British Pound which soared to trade at 1.6747 after industrial and manufacturing data both printed well above expectation. Traders here too will be looking at trade numbers today. U.K. industrial production rose more than economists forecast in February, bolstered by a surge in factory output that points to a strengthening recovery. Production increased 0.9 percent from January, exceeding the 0.3 percent median forecast.
Not to ignore the activity in Asia, the JPY eased against the US dollar after it rallied on Tuesday after the BoJ held rates and policy and gave indications that it was finished offering stimulus. The JPY is trading at 102.05 after closing at the 101.80 level.
The Tasmanian currencies are putting in stellar performances with both at record highs. The AUD is trading at 0.9375 up by 18 points today while the kiwi has added 30 points to break above the 87 price level on hopes of a second interest rate increase later this month.