The US dollar ended the past trading week as the weakest currency on the Forex market. The Federal Reserve monetary policy meeting was the major event affecting the greenback during the week, though there were plenty other events that were affecting other currencies.
While the Fed did not cut interest rates at this week’s meeting and was rather optimistic about the US economy, it signaled that one or even two cuts later this year are possible. That allow the euro to rally on the dollar, but the shared 19-nation currency was itself vulnerable due to dovishness of the European Central Bank. The Reserve Bank of Australia was no different, signaling in its minutes of this month’s monetary policy meeting that rate cuts are likely, and RBA Governor Philip Lowe confirmed in his speech later that it is not unreasonable to expect cuts down the line. The central bank of Norway had a completely opposite stance, raising interest rates this week and signaling that more hikes are possible.
Beyond central banks, geopolitical tensions were the theme of the week. The week started with India announcing that it enters a tariff war with the Unite States. But more important event happened later during the week, when Iran shot down an unmanned US drone. Unsurprisingly, that worsened the already strained relationships between the United States and Iran. On the positive side, US President Donald Trump said that he is planning to meet with Chinese President Xi Jinping at the G-20 meeting, and market participants were hoping that the meeting will help to make a progress in resolving of the trade conflict between the world’s two biggest economies.
Meanwhile, the Great Britain pound continued to suffer from Brexit fears, though the dovish central bank was not helping either.
EUR/USD rallied from 1.1209 to 1.1370 during the week. USD/CHF sank from 0.9982 to 0.9762. USD/NOK plunged from 8.7161 to 8.4938.
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