Dollar Index Falls as Hopes for a Brexit Deal Rise
October 12, 2018 2:41 pm
In the third quarter, the USD was among the best-performing currencies. As it rose, it left victims behind. Most of these victims were the emerging market currencies like the Indian Rupee, Indonesian Rupiah, Turkish Lira, and Argentina Peso. While the developed countries currencies fell, the declines were not as pronounced as those of the emerging markets.
This week, the USD declined significantly as the developed countries’ currencies rose. This was caused by a few things. First, the US released mixed jobs numbers on Friday. While the unemployment rate declined to 3.7%, the headline employment numbers were lower than what investors had hoped. Importantly, the wage growth declined to 2.3% from the previously released 2.4%.
The jobs numbers led to many investors believing that the Fed was unlikely to continue the tightening process. In addition to this, on Wednesday, the president went on a full-blown war of words with the Fed. In an interview, he said that the Fed had gone crazy. He then doubled down saying that the Fed had gone loco. By this, the president was criticizing the Fed for the continuous process of rate hikes. While he was the one who appointed the current Fed chair, he believes that the Fed is working to get him.
This was further compounded by the hope from Europe. A report said that EU and UK negotiators were hard at work and aimed to have a compromise deal as early as on Monday. This led to the surge of the euro and the sterling.
The dollar index declined to a weekly low of 94.67. This was the lowest level since the beginning of the month. The gap between the 14 and 21-day SMA is widening while the momentum indicator shows that the index could fall further. If it does, it will likely move to the 94 level.
In the third quarter, the USD was among the best-performing currencies. As it rose, it left victims behind. Most of these victims were the emerging market currencies like the Indian Rupee, Indonesian Rupiah, Turkish Lira, and Argentina Peso. While the developed countries currencies fell, the declines were not as pronounced as those of the emerging markets.
This week, the USD declined significantly as the developed countries’ currencies rose. This was caused by a few things. First, the US released mixed jobs numbers on Friday. While the unemployment rate declined to 3.7%, the headline employment numbers were lower than what investors had hoped. Importantly, the wage growth declined to 2.3% from the previously released 2.4%.
The jobs numbers led to many investors believing that the Fed was unlikely to continue the tightening process. In addition to this, on Wednesday, the president went on a full-blown war of words with the Fed. In an interview, he said that the Fed had gone crazy. He then doubled down saying that the Fed had gone loco. By this, the president was criticizing the Fed for the continuous process of rate hikes. While he was the one who appointed the current Fed chair, he believes that the Fed is working to get him.
This was further compounded by the hope from Europe. A report said that EU and UK negotiators were hard at work and aimed to have a compromise deal as early as on Monday. This led to the surge of the euro and the sterling.
The dollar index declined to a weekly low of 94.67. This was the lowest level since the beginning of the month. The gap between the 14 and 21-day SMA is widening while the momentum indicator shows that the index could fall further. If it does, it will likely move to the 94 level.
The post Dollar Index Falls as Hopes for a Brexit Deal Rise appeared first on Forex.Info.
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