Friday, July 29, 2016

Dollar Index Falls at 2-week Lows

The dollar tumbled to new two-week lows against a basket of other major currencies during the course of Friday’s session, after the Bank of Japan (BOJ) disappointed market anticipations earlier in the session and the Federal Reserve has failed to act on Wednesday.

Meanwhile, market players are closely watching for the release of the U.S. economic growth data.
USD/JPY slipped by about 1.59% to changed hands at a three-week low of 103.57.

During the monthly policy meeting on Friday, the BOJ reported a broadly higher purchases of exchange-traded funds (ETFs), but its base money target remained steady at 80 trillion yen, including the pace of purchases for other assets.

The central bank left the negative interest rates unchanged at -0.1%.

The decision has disappointed the market expectations for a stimulus package worth 28 trillion yen as pledged by Prime Minister Shinzo Abe last week to help lift the economy.

The policy statement was announced after the Fed left interest rates on hold at the conclusion of the two-day policy meeting, suggesting an expected move.

In its statement, the Fed said that “near-term risks to the economic outlook have diminished” and that the labor market has “strengthened”.


All Eyes on the U.S. Economic Growth Data

Further, investors are now closely watching on the upcoming U.S. economic growth data for the second quarter, scheduled on Friday for further signals on the current stated of the economy.

EUR/USD rallied 0.22% to end the session at 1.1101.

In other news, Eurostate mentioned that the consumer price index of the euro zone has seen a 0.2% increase at an annual basis in July, topping the analysts’ estimate of a 0.1% uptick and after a 0.1% increase during the last month.

Core CPI, in exclusion of food, energy, alcohol and tobacco, has seen a 0.9% rally in the previous month, year-on-year, in line with anticipations.

The pound remained steady, with GBP/USD resting at 1.3171, while USD/CHF lost about 0.40% to settle at 0.9768.

Subsequently, the Bank of England announced an increase in net lending to individuals to £5.2 billion in June from £4.5 billion in May, suggesting an upwardly revision from an earlier forecast of £4.3 billion.


Analysts are expecting the bank to post a broadly higher net lending to individuals of £4.2 billion in the previous month.

However, the pound’s gains were covered as market players’ attention retreated to BoE’s policy meeting next week amid mounting anticipations for a rate cut.  

The Australian dollar remained flat, with AUD/USD at 0.7504, while NZD/USD rallied to 0.34% to 0.7094.

USD/CAD rose 0.17% to 1.3179.

The U.S. dollar index, which gauges the dollar’s strength against a basket of major rivals, tumbled 0.37% at 96.33, suggesting its lowest level on the record.


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