After posting losses against most of the majors for a number of consecutive days, the US dollar has gotten some help from strong economic data. On August 5th, the US dollar was supported by better than expected ADP Non-Farm Employment Change, which came out at 42k, a whopping 17k improvement over the expected 25k. As a result of these positive data, the US stock markets were able to post gains as NASDAQ strengthened by 0.88% and Dow Jones strengthened by 0.41%. In the forex trading market, the dollar traded mixed against the major currencies, a welcome change from the past week of posting losses against most majors.
Both the euro and the British pound weakened against the dollar. The EUR/USD pair traded at a high of 1.3239 and a low of 1.3130. The GBP/USD pair traded at a high of 1.5962 and a low of 1.5854. The dollar marked a new low against the Japanese yen, but was able to recover to surpass the 86 level. The USD/JPY pair traded between 85.31 and 86.37.
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The British pound has strengthened against the dollar over these past weeks and has hit the highest level since February. Hampered earlier this year by uncertainty over the elections, the British pound is now starting to show impressive signs of the country’s economic recovery. In fact, the rate of recovery even urged England Deputy Governor John Gieve to advise policy makers not to purchase bonds or loosen monetary policies. Hopefully, this confidence will be reflected in investor forex trading. The GBP/USD forex pair traded at a low of 1.5861 and a high of 1.5968. It is expected that UK Services PMI and Halifax HPI are going to strengthen.
In the US, the main theme of the forex trading community right now is home sales. Pending Home Sales data failed to impress investors on the August 4 trading day. Instead of finally breaking the negative streak and posting the forecast 0.5% improvement, pending home sales came out at -2.6%. As a result, investor confidence waned and the dollar weakened against most of the majors.
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As the euro bounces back from its abysmal numbers that were posted earlier this year, forex trading activity has been a buzz. The euro just posted a three-month high against the dollar, showing that the euro is indeed on its way to recovery. Investors still have reasons to worry, though, as debt problems continue to threaten another fallout for the euro. For now, at least, the EUR/USD pair is threatening to push past the 1.3200 mark, as it traded at a high of 1.3195 and a low of 1.3055 on August 3rd.
The strengthening of the euro is also due in part to the weakening of the US dollar, which is currently suffering from a slow down in US economic growth. Gold only posted minimal gains of 0.1% to close at $1,185.4 per ounce, while crude oil increased by up to 3% to close at $81.34. As for the stocks market, Dow Jones gained by 1.99% and NASDAQ by 1.80%.
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