Mixed Week for Dollar Starts with Fear, Ends with Hope
The US dollar had a mixed week as initial risk aversion was weakened by the weekend. The first half of this week was good for the currency, but the market mood changed in the second half, reducing both gains and losses of the greenback.
The major cause for worries this week was Spain as the country did not request a bailout still. The nation’s credit rating was downgraded by Standard & Poor’s. At first, that event caused risk aversion on the Forex market. Yet later, experts speculated that the rating cut may spur the Spanish government to ask for aid sooner.
The economic forecast of the International Monetary Fund was another major market driver during the week. The IMF lowered its growth projections, boosting demand for risk. Later, the fund said that deficits of the developed economies will be lower than previously estimated.
Positive macroeconomic fundamentals in Australia led to gains the nation’s currency versus its US counterpart. The data from the United States was also positive, further weakening appeal of the greenback as a haven.
EUR/USD was down from 1.3023 to 1.2955 and its weekly low was at 1.2823. USD/JPY declined from 78.64 to 78.38 this week. AUD/USD rose from 1.0153 to 1.0229.The US dollar had a mixed week, as initial risk aversion was weakened by the weekend. The first half of this week was good for the currency, but the market mood changed in the second half, reducing both gains and losses of the greenback.
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Earlier News About the US Dollar:
- Is the US Dollar Winning the Race to the Bottom? (2012-10-11)
- US Dollar Moves Sideways as Other Currencies Look for Gains (2012-10-10)
- US Dollar Firms After Mario Draghi's Speech (2012-10-09)
- Nonfarm Payrolls Do Not Harm Dollar to a Great Extent (2012-10-05)
- Dollar Jumps vs. Yen on Employment Data (2012-10-05)