Bullish Trend Seen for USD

The U.S. Dollar’s recovery was extended against the Japanese Yen and moved well off the 2-month trough struck during the previous trading session. Since Friday, the USD/JPY pair has gained 3.3% and was recently trading at 98.12 Yen, well off that day’s 94.98 Yen low. The U.S. Dollar Index also gained 0.2% to trade at 81.880 .DXY, recovering steadily from last week’s low of 81.077 .DXY, a 3-month trough. The dollar gains are being attributed to a combination of factors, notably some improvement in U.S. labor data which hints at the possibility of the Federal Reserve drawing back some stimulus, as well as the Bank of Japan’s clear efforts to devalue the Yen through aggressive easing.

In China, recent data suggests that economic growth is faltering to an unforeseen extent, and some analysts now believe that they may not hit their 7.5% growth target for 2013. That news sent the Aussie Dollar markedly lower, with the AUD/USD pair losing more than 1% to trade at $0.9393, a 20-month trough, before recovering slightly to $0.9411. As China is Australia’s primary trading partner, any deterioration in economic growth weighs heavily on the Aussie Dollar. The New Zealand Dollar lost 0.6% against the greenback on the news, as well, with the NZD/USD pair trading at $0.7821 before settling at $0.7838.