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Weekly roundup: US dollar struggles for direction amid a mixed market mood

currency-newsWeekly roundup: US dollar struggles for direction amid a mixed market mood
The US dollar lost ground early last week amid an improving market mood. With risk appetite high, investors shunned the safe-haven dollar for higher-yielding currencies.

USD was also dented by an unexpected fall in industrial production, with September’s report printing at -1.3% rather than the 0.2% economists had expected.

Risk sentiment wavered throughout the week, causing the ‘Greenback’ to fluctuate and capping any significant gains.

Towards the end of the week, the US dollar managed to edge higher. Initial jobless claims fell to a new pandemic low, indicating a strong recovery in the US labour market. Meanwhile, the US Markit services PMI smashed forecasts, more than making up for a slight dip in the country’s manufacturing PMI.

Rising US Treasury yields boosted the ‘Greenback’ as this week’s trade began, with the US ten-year note hitting a five-month high. However, a risk-on market mood dampened the appeal of the safe-haven dollar on Tuesday.

As for the rest of the week, the US dollar may initially face some headwinds. US durable goods orders are expected to have contracted in September, which may weigh on the US dollar.

The advance figures for America’s GDP growth rate could also dent USD, as they’re forecast to show a significant slowdown in economic expansion from 6.7% in the second quarter to 2.7% in the third.

Finally, the US PCE price index is projected to rise from 4.3% to 4.4%. As this is the Federal Reserve’s preferred measure of inflation, USD investors will be particularly sensitive to any surprise results as they may influence the Fed’s monetary policy approach.
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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