Dollar pares back its weekend gains as the Yen and the Euro rises. Dollar was dragged down by poor US employment data and a dovish FOMC statement last week. The Yen and the Euro climbed against the dollar this week, as they exploited the inherent weakness in Dollar.

On Tuesday last week, the greenback appreciated against the Euro as the Euro/USD pair fell by 0.02% to $1.3164. Against the Japanese Yen, the Dollar pared back its early losses to settle at 98.000 Yen. Later on Wednesday, Dollar slipped as the Euro/USD pair climbed up by 0.55% to t$1.3336. Against the Yen, the Dollar again slipped to a low of 97.50 Yen.

On Thursday, Dollar again rebounded from its previous day’s slump, as the Euro/USD pair dropped by 0.61 % to trade at $1.3221. This was after it reached a low of $1.3194. Meanwhile, Dollar rose against the Pound Sterling as the GBP/USD pair fell by 0.50% to $1.5132.

Last Week the greenback suffered a setback from a slew of disappointing US economic data. The US consumer confidence index dropped to 80.3 in July from 82.1 in June. This fall was worse than the expectations of a decline to 81.0. Meanwhile, the Euro Zone economic confidence strengthened to a 15-month high in July, due to an increase consumer confidence.  The unemployment rate in Japan too beat expectations, as it fell to 3.9% against an expected 4.0%.

Moreover, on Wednesday last week, the FOMC meeting revealed that Fed plans to continue its $85 billion-per-month bond-buying program, for now. The Fed’s decision was due to factors like modest economic growth, with higher mortgage rates and inflation still below Fed’s target of 2%. The Fed also decided to continue the interest rates at the present 0.25%. These factors brought down the Dollar against its major trading partners like the Euro and the Yen.  

However, the greenback got a reprieve from the US jobless data that recorded its biggest fall. The Department of Labor reported that the US jobless claims data fell by 19000 to 326,000. This clearly bet the expectations of a fall to 345,000, signaling a recovery in the US labor market. This helped the dollar rebound, as it pared back its previous losses on Thursday.

Later, on the weekend, the Dollar index fell to 81.98 on Friday, compared to a previous mark of 82.44. This was after it reached a low of 81.39. In line with this trend, the Euro rose against the Dollar by 0.4 % to $1.3265, while the Dollar fell by 0.4% against the Yen to reach 99.11 yen.

Starting this week the US Dollar continued its downtrend from Friday’s fall. The greenback declined against the Yen by 0.2% to 98.77 Yen. While the Japanese Yen, rose by 0.1% against the Euro to trade at 131.16 Yen per euro. The Dollar remained broadly unchanged against the Euro at $1.3279.

On Friday, last weekend the Dollar that had showed signs of a rebound, again plunged against the Euro and the Yen. This was mainly due to the mixed signals from the US labor market, as the employment data showed that far less jobs were added than expected. The report from labor department revealed that in July jobs grew by 162,000, well below the predicted increase of 184,000.

Moreover, the Chinese economy that was speculated to be in a slowdown, revealed that its non-manufacturing PMI rose to 54.1 from previous month’s 53.9. This again dragged down the dollar on Monday, as it lost the favorite position as a safe havencurrency.

Thus, the Dollar has been trading up and down due to mixed signals from US economic data. The Fed’s dovish comments after last week’s FOMC meeting, further weighed down on the Dollar. But, investors have not yet lost faith in the Fed’s target of QE tapering by this year end. So, the possibility of a dollar rebound depends on positive US data, as this week proceeds.

Note: This blog is just an expression of the author’s opinion and cannot be deemed responsible for any losses incurred.