The major theme this week was risk aversion due to the news from China. This allowed the US dollar to gain against the Great Britain pound and commodity-linked currencies during the past trading week. At the same time, the greenback fell against the Japanese yen and, surprisingly, against the euro.
The week has started with bad news from China, and that theme continued to affect the Forex market for the whole week. As a result, safe currencies appreciated while currencies linked to growth and other risky ones declined. The sterling, while not being inherently risky, suffered from waning optimism for Britain’s economy.
By the weekend, another source of risk aversion surfaced — amazing US non-farm payrolls. They suggested that the Federal Reserve is going to continue with its cycle of monetary tightening, bolstering the dollar and making investors pull away funds from assets associated with risk.
EUR/USD was up from 1.0872 to 1.0919, bouncing from the weekly minimum of 1.0710. USD/JPY dropped from 120.19 to 117.49. GBP/USD tumbled from 1.4732 to 1.4526. AUD/USD sank from 0.7283 to 0.6975.
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