Surprisingly Good Sentiment Hurts Dollar, Leading to Weekly Losses

The US dollar was down this week against most major currencies as the unexpectedly positive mood among Forex traders damped demand for the safety of the US currency. The greenback rose against the yen, but even the franc (which is still often behaves as a safe currency) outperformed the dollar.
At first, it looked like the negative sentiment from the previous week would continue affect markets. But then the announcement of the joint effort of the six major central banks to bring down interest rates on dollar swaps caught traders by surprise and set theme for the whole week and that theme was “risk appetite”.
The optimism somewhat waned by the end of the week as the negative factors, like the slowing China’s manufacturing, influenced the market sentiment. Investors still retained the good outlook for the future and the good data demonstrated by the US non-farm payrolls helped to encourage market participants.
The dollar was almost unchanged against the euro at the first two days of the week, was falling on the next two day and on Friday moved to the upside, but not enough to erase losses. The pound and the franc were rising versus the US currency in the first half of the week and was falling the second half. The greenback jumped against the yen on Monday, erased its gains on Wednesday, but later continued to advance.
EUR/USD was up from 1.3323 to 1.3391, touching 1.3547 in the middle of the week. GBP/USD rose from 1.5486 to 1.5595 and USD/CHF slipped from 0.9275 to 0.9209. USD/JPY gained from 77.56 to 77.95 during this week.

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