Stock Market Watch

Forex Market Update: Dollar Slips as Investors Eye FOMC

by ·


The U.S. dollar traded broadly lower on Monday as investors cut positions in the U.S unit, ahead of the Federal Reserve’s policy rate statement on Wednesday, which according to market grapevine, could herald a dovish forward-looking guidance.

The U.S. dollar index, a measure on U.S. unit vis-à-vis  a basket of six major traded currencies, traded as low as 81.50 on Monday, down from its previous close of 81.62.

At last check, the Index was down 0.04% to 81.62.

Commenting over slide in the dollar index Alvin Tan a currency strategist at Societe Generale said, “Investors are trimming long dollar positions going into the Fed meeting as they are expecting the Fed not to just have a dovish bias but also a pledge to keep rates low,” according to Reuters.

Tan, however, added that the Fed will eventually start the winding down of its asset purchase program, which in turn could boost the U.S. dollar. Thus, “Any dip in the dollar is a buying opportunity,” said Tan.

Meanwhile, the Labor Department’s monthly non-farm payrolls report will be closely watched. The job data is slated to be released on Friday. A strong job data will support the case for early winding tapering of the quantitative easing. According to Reuters’ poll, economists expect 185,000 net job additions in July while the unemployment rate is expected to fall to 7.5%.

Meanwhile, the U.S. dollar tumbled to its one-month low against the yen on Monday. The Nikkei 225 plunged 3.32% amid reports that the Japanese economy was beginning to lose its momentum. Typically, the Nikkei and yen are inversely correlated. Investors in order to cut losses, take safety in the Japanese currency, which is considered as highly liquid.

At last check, the dollar was down 0.24% to trade at 97.86 yen.

 








More Posts by this author

edliston
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.

You may also like...