Friday, 14 Aug 2009

Dollar Ends a Weak of Downtrends with Modest Corrections

During the past week, the Dollar continued to weaken and saw downtrends against all the major currencies. The EUR/USD rose over the 1.4300 level, and the USD/JPY dropped lower than the 94.50 level. However, close to the weekend the USD rose against the EUR on positive infaltion data, correcting some of its losses. And now the EUR/USD is traded lower then the 1.4200 level.

Two main reasons led to the Dollar's downfall this week. First, the Fed decided to leave Interest Rates at its low figures. Due to recent positive economic data, many thought that an interest rates hike is likely to take place, and the FED's reluctant to do so, has weakened the greenback. In addition, some poor economic data was published this week from the U.S. economy. The negative Retails Sales figures for July and the poor employment figures for the past week showed that economy's recovery is still uncertain.

Looking ahead to the following week, a batch of significant data is expected from the leading economies. Traders are advised to follow the U.S. Building Permits, and Producer Price Index (PPI) figures. The German ZEW Economic Sentiment and the British Retails Sales publications also have the potential to increase volatility in the market.