The US dollar continued to be driven mostly by monetary policy outlook during the past trading week. Unfortunately for the currency, the outlook was not particularly supportive, though it has changed a bit by the weekend.
The dollar was rather soft for the most part of the week as most market participants remained skeptical about chances for the Federal Reserve to continue monetary tightening in the near future. Fed minutes released during the week were not helping as they have shown division between US policy makers in the view of appropriate timing for raising interest rates again. Things improved a bit for the greenback before the week ended as comments from various Fed members were starting to convince some traders that a rate hike is still possible.
Yet overall, the policy outlook remains unsupportive for the dollar. According the to the CME FedWatch site, chances for a hike in December are just little above 50% while only 12% of speculators bet on a raise in September. The only saving grace for the US currency is the fact that monetary policy of other developed nations’ central banks is also not supportive for their respective currencies.
EUR/USD rallied 1.4% from 1.1166 to 1.1327, and its weekly high of 1.1366 was the highest rate since the huge slump on June 24 when the Brexit announcement shocked markets. GBP/USD advanced 1.3% from 1.2917 to 1.3079. USD/JPY was down from 101.11 to 100.13, and its weekly low of 99.64 was the weakest rate since November 2013.
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