Another Weekly Loss of US Dollar, Decline Can Still Be Reversed
Currencies’ movements were driven by two major themes this week: the speech of Federal Reserve Chairman Ben Bernanke at the Jackson Hole Symposium and the bailout for Spain. The US dollar ended with yet another weekly loss by the weekend, but further decline is by no mean guaranteed.
Bernanke has given hints about the second round of the quantitative easing program at Jackson Hole in 2010 and Forex market participants hoped that he would do so again at this week’s symposium. Speculations about Bernanke’s speech were driving the dollar the whole week. At the end, the Chairman confirmed that he remains in favor of QE, but failed to mention exact timing of such action. That was somewhat disappointed both for dollar bulls and bears, though bears have won the day. Yet without the actual move from the Fed the losses can be easily reversed.
As for Europe, the main driver of the FX market was speculations about the rescue for Spain. Many traders were sure that the indebted country would get aid soon and were disappointed after the bailout was postponed. That disappointment boosted the dollar slightly, but was unable to neutralize the effect of Jackson Hole. Spain will likely remain in the forefront of news in the near future.
China also appeared in the news as analysts were expecting that the government data would show that nation’s manufacturing contracted. The report was indeed bad, even worse than expected, but it came out after the close of the trading session, therefore its impact will be felt only last week.
EUR/USD rose from 1.2508 to 1.2574 and its weekly high was at 1.2637 was the highest since July 2. GBP/USD ticked up from 1.5814 to 1.5865, while USD/JPY fell from 78.65 to 78.38 this week.
If you have any questions, comments or opinions regarding the US Dollar, feel free to post them using the commentary form below.
Earlier News About the US Dollar:
- Bernanke's Speech Drives Dollar Down (2012-08-31)
- US Dollar Lower as Jackson Hole Meeting Gets Under Way (2012-08-31)
- Dollar Jumps as Ahead of Jackson Hole Symposium (2012-08-30)
- US Dollar Forecast: Waiting for Jackson Hole (2012-08-28)
- Fed Makes Week Bad for Dollar (2012-08-25)