Hard Week for Dollar as US Economy Stalls
The US dollar dropped this week against most major currencies as the macroeconomic data was terrible, reducing attractiveness of the currency as a safe asset.
The global economic situation wasn’t very favorable for the dollar. The influence of the European crisis on market sentiments weakened somewhat,
Without the support from outside of the US the dollar could only rely on the new from America. And the news were really. Virtually every sector of the US economy, be it manufacturing of the housing market, performed very bad. Some analysts think that the reasons for the economic slowdown were temporary, like the fuel prices hike last month, and soon we’ll see again evidences of the economic recovery in the US. For now, though, the greenback remains week.
EUR/USD opened at 1.4124, slid during the week to 1.3969, but rebounded and closed at 1.4301. USD/CHF slumped to 0.8489 from 0.8790, while NZD/USD rallied to 81.88 from 0.7933.
USD/CAD closed at 0.9759 near its opening price of 0.9740, following the advance to the weekly high of 0.9815. Canada’s economy is too closely tied to the economy of the US, the nation’s biggest trading partner, to allow its currency to profit from demand for riskier assets.
If you have any questions, comments or opinions regarding the US Dollar, feel free to post them using the commentary form below.
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CategoriesEarlier News About the US Dollar:
- Dollar Slumps on Personal Spending & Pending Home Sales (2011-05-27)
- US Dollar Falls on GDP & Rising Unemployment Claims (2011-05-27)
- European Crisis Deepens, Stocks Suffer, Dollar Jumps (2011-05-24)
- US Dollar Posts Weekly Losses as Economy Looks Bad (2011-05-21)
- US Dollar Falls as Economy Weakens (2011-05-20)
1 Comment
It is undeniable that it has been a tough week for the US; particularly with the second Quarter GDP revision failing to meet analysts’ expectations. Whilst there is evidence as you suggest that some of the influences restraining the US Economy are temporary, I would suggest signs of gradual improvement are beginning to show. Notably, with Personal Income and Personal Consumption Expenditure having both recorded strength last Friday; despite a small decline in the latter; there are signs that the US Economy could still see GDP growth in the coming Quarters
At the same time, this coming week’s Non Farm Payroll data will prove particularly relevant in illustrating subsequent employment levels. Having recorded a small rise to 9% last month, I believe that we could once again see the Unemployment Rate fall slightly to around 8.9% this month. Together with the above; and bearing in mind that there are signs that inflation, whilst low, is very slowly on the rise; I think that there is still a good chance that the US will see growth through the coming Quarters.