Stock Market Watch

Forex Market Update: Dollar Index Gains as Panic Sell-Off Halts

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The dollar index recovered somewhat on Friday after falling to a seven week trough earlier this week as the panic sell-off of the U.S. unit, which was triggered after the Federal Reserve surprisingly opted to not taper the quantitative easing, halted as investors unwound negative bets.

The Dollar Index, a measure on U.S. unit’s performance against a basket of six major traded currencies, edged up 0.10% to 80.43

The WSJ Index, which uses slightly broader currency basket, rose 0.12% to 72.98.

The dollar index, which fell to its seven week low on Wednesday following Fed’s surprise decision, gained some traction on Thursday as spate of better-than-expected U.S. data releases supported the greenback.

Still, it is believed that the dollar will remain under pressure in the short-term as the Fed hasn’t provided any clear indication over when it intends to start scaling back its bond purchase program.

“I don’t see any recovery in the dollar just yet. FX markets didn’t react too much to the positive U.S. data. That shows there is still a lot of concern about the Fed’s future monetary policy,” said Lutz Karpowitz, currency analyst at Commerzbank, according to Reuters.

The long-term outlook is positive for the dollar though; given the fact that the Fed will eventually start tapering of asset purchases at some point of time.

“At some point the Fed will move to taper and we will see U.S. yields move a bit higher and support the dollar,” Sara Yates, global currency strategist at JP Morgan Private Bank, according to Reuters.








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Post Written By: Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.

Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing.

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