USD is exceptionally strong (video)
Volatility in FX trading has picked up. The dollar index is ready to show 11th consecutive week of growth. US currency rose as the US economic growth outlook improved increasing the bets that the Federal Reserve will raise interest rates. In October the Fed will end its massive stimulus program, which has been weakening dollar for a long time.
In the past week American dollar has significantly strengthened versus the euro and Swiss franc and totally smashed commodity currencies. These currencies are affected by concerns about China, falling commodity prices, swings in the risk sentiment and the increase in US yields. As for the pair USD/CAD, watch for the key level of 1.1100. A close above here will make the pair test March highs in the 1.1200 area next week. NZD/USD fell below $0.8000 and got below the downtrend channel. Watch $0.7810 on the downside (monthly Ichimoku Cloud). AUD/USD slumped below $0.8900 and is on its way to this year’s low at $0.8660.
Next week these will be plenty of economic releases in the US. The most important ones are CB Consumer Confidence on Tuesday, ISM Manufacturing PMI on Wednesday and, of course, Non-Farm Employment Change and Unemployment Rate on Friday. There’s the risk of some correction in USD as the fund managers will take profits at the end of the month and the third quarter.