Greenback’s String of Declines

In Asian trading the U.S. Dollar is poised to record a straight week’s worth of declines while the Index held near to a 7-week trough following the recent release of unexpectedly strong economic data from China which gave investors a reason to seek out higher yielding currencies. Also pressuring the greenback is an escalation of investors’ uncertainty over the Federal Reserve Bank’s QE scheme which no longer appears on the brink of cessation as it had seemed only a few short months ago. Improving labor data, which is a Fed condition for tightening, continues to be erratic with this week’s application for new jobless benefits rising to 333,000, slightly lower than expectations but higher than last week’s upwardly revised numbers.

The U.S. Dollar Index had struck a 7-week trough of 80.878 during yesterday’s trading session and only succeeded in edging a few pips higher today. The EUR/USD pair briefly touched on a 7-week peak of $1.3401, but gave back some of those gains and was trading at $1.3378, still close however to June’s peak. The Aussie Dollar recovered some of this week’s losses following the Chinese data release with the AUD/USD pair edging up to $0.9105 and moving away from the 3-year trough of $0.8848 struck earlier in the week.