Strong US dollar and a strong US economy

On Thursday, data reported in the United States indicated a decrease in initial jobless claims to 216k and Continuing Claims to 1.679 million, both of which exceeded market expectations. Following the release of the news, the US Dollar Index rose to 105.15, its highest level since March, before falling slightly to 105.05. Economic data reinforce …

On Thursday, data reported in the United States indicated a decrease in initial jobless claims to 216k and Continuing Claims to 1.679 million, both of which exceeded market expectations. Following the release of the news, the US Dollar Index rose to 105.15, its highest level since March, before falling slightly to 105.05. Economic data reinforce the “higher for longer” interest rate narrative and boost the US Dollar.

 

EUR/USD pair closed at 1.0700, its lowest daily finish in three months. The Euro looks weak, with a strong downward tendency and no indications of stabilization. The final Consumer Price Index for Germany is due soon, and no surprises are expected. The European Central Bank (ECB) will meet next week to discuss monetary policy, and there is presently no clear consensus on what moves it may take regarding interest rates.

 

The USD/JPY fell slightly after touching new multi-month highs just around 148.00. The reversal in US rates boosted the Japanese yen on Thursday. Japan reveal Q2 GDP growth figures earlier today.

 

The British Pound fell for the sixth time in the past six days versus the US Dollar. GBP/USD fell to a three-month low of 1.2445, close to the 200-day SMA (1.2425), before recovering and climbing to 1.2470.

 

Despite hints of improvement in China’s trade figures, the Australian Dollar remains under pressure from commodities prices and a higher US Dollar. With a negative bias, the AUD/USD is range-bound between 0.6360 and 0.6400, approaching monthly lows.

 

Despite positive Building Permits and Ivey PMI data, the Canadian Dollar under-performed throughout the Americas session. Following the Bank of Canada’s decision to leave interest rates constant at 5%, Governor Macklem explained the rationale and stated that underlying inflation had little downward momentum. USD/CAD has reached its highest level since March and is aiming for 1.3700. On Friday, Canada will disclose its August employment data. 

 

Risk disclaimer:

 

Please note that this article does not offer any instructions or suggestions regarding investment decisions. It is important for you to conduct your own research or seek professional advice from a qualified professional before conducting an investment decision.