USD Index Lost Upside Momentum, Gold and Euro Soars
USD index retreated from one week high that it had hit on Thursday as the market analysts are still bearish over the greenbacks future fundamentals. The concerns over US economic growth and Federal Reserve’s low-interest-rate policy is among the biggest bearish factors for the USD index.
US dollar has already lost significant value against other major currencies since the coronavirus spread devastated American businesses and the domestic economy. The fed has slashed interest rates to the zero range, with the strategy of making cash financing easier for businesses and consumers.
The USD index is currently hovering close to 92.77 against the basket of six major currencies. The index is down more than 4% in the last three months.
The market pundits expect U.S. nonfarm payrolls for August to grow by 1.4 million, down from 1.763 million jobs in the past month. U.S. weekly jobless claims also dropped below 1 million levels last week.
“The dollar has rebounded against the euro and could continue to rise a little further,” said Junichi Ishikawa, senior foreign exchange strategist at IG Securities in Tokyo. “However, my main scenario is for the dollar to fall, for stocks to rise and for yields to fall because the Fed is expected to stick with low-interest rates.”
After hitting two years high, the euro fell back to 1.18 level against the US dollar. The retreat is mostly blamed on concerns over European Central Banks’ potential interruption to cool off the common currency rally. The market pundits say euro’s rally could create pressure on European exports.
Gold price generated some gains on Thursday after hitting one week low. The yellow metal is currently trading around $1938 per ounce. The stock market selloff has added to the gold price in the latest session. The gold price has recently crossed the $2000 level for the first time in history.