The US Dollar continued to edge higher after last week’s modest comeback which came after investors decided that the recent two-week fall might be have been temporary and that the US economy is on the verge of a turn around. FX traders had been attempting to gauge the timing of a rate hike from the Federal Reserve, but improvements in economic data last Friday, specifically from improved vehicle sales and a surge in consumer sentiment, have resulted in a more hawkish outlook which has helped to push the Dollar broadly higher.
As reported at 9:03 am (BDT) in London, the U.S. Dollar Index was trading at 95.434, an overall gain of 0.2% after last week’s decline of nearly 5% of its relative value. The EUR/USD was trading at $1.1167, a loss of 0.3% for the Euro, while the GBP/USD was trading at $1.5135, down 0.1%. Analysts believe that despite the better than expected recent data, investors should remain wary of a Dollar correction.
Aussie Trade Wary Ahead of RBA
In Australia, investors are betting that the central bank there is likely to lower interest rates; that probability is already being priced into the Aussie Dollar, with the AUD/USD down $0.7823, a loss of 0.3%. If the Reserve Bank of Australia does surprise and maintains the status quo, say some currency strategists, traders could see the pair retrace to $0.7900 or even $0.8000. The Aussie Dollar has been under pressure given the recent tepid economic readings from China, a key trading partner and export destination for Aussie goods and commodities.