USD may bottom soon

The main question for the market players is whether the Federal Reserve will be the first major central bank to withdraw monetary stimulus. The Fed’s policymakers have hinted in recent weeks that the central bank could start to scale back its monthly bond buying in September, but this will depend on further improvement in the job market.

On Friday, August 2, US Non-Farm disappointed investors (the number of employed rose by 162K vs. 184K expected). This was weighting on USD during the whole week as traders have doubts about the Fed’s resolve to start tapering QE. US unemployment claims fell to the lowest level since 2007. In addition, there were some signs of economic improvement in Europe and China. EUR/UD rose to $1.3400. On Thursday US dollar index slid to 7-week low below 81.00.

Still, many analysts think that USD won’t decline much further. The Fed is expected to start reducing stimulus sooner or later. Next week the US will release some important data like retail sales on Tuesday, August 13. There will be also releases of inflation, industrial production, manufacturing activity, housing market and consumer sentiment. Good figures from America will change the market’s sentiment and make USD strengthen.  

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