The US Dollar initially driven up by FOMC meeting’s vague inclination towards tapering QE in September, later, fell back on poor US Jobless claims, Housing Sales, and Durable Goods data. But, later the mounting tensions in Syria boosted the Dollar demand and drove up its value as a currency safe haven for hedging of investments.

On Wednesday last week, the Dollar index advanced to a high of 81.16 and settled down to 81.13. Reflecting this trend, the USD/JPY pair was trading higher around 97.50, after reaching a high point of 97.66. On Thursday, the greenback declined against Euro with the Euro/USD pair trading at $1.3339, after hitting a high of $1.3356.

On Friday weekend, the Dollar continued to decline, as the Euro/USD rose to $1.3390 from its previous session rate of $1.3350. The greenback fell against the Yen, as the USD/JPY pair plunged to 98.565Yen from its two week high of 99.139 Yen.

Initially, the greenback rose on the expectations of the Fed tapering its stimulus this September. But, the FOMC meeting minutes did not come out strongly in favor of the QE tapering by September, quashing market expectations. Also, the US jobless claims report was downbeat, as it rose by 13,000 to 336,000, more than the expected increase of 330,000.

On the other hand, the Eurozone Purchasing Managers’ Index (PMI) report revealed that European economy’s manufacturing activity in August has grown to its fastest rate in the past 26 months. The Eurozone service sector too had shown an increase to a 24 month high that firmly boosted Euro against the Dollar. Moreover, the US housing sales too plummeted by 13.4% in July from previous month’s reading of 455,000.

On Monday this week, the Dollar index that tracks greenbacks’ movement against the six major currencies slipped to 81.30 from a high of 81.54. Mirroring this trend the USD/JPY pair dropped to a low of 98.26 from 98.83. The Euro/USD pair climbed to $1.3393 from its low of $1.3356. The pound too strengthened against the Dollar as it rose to $1.5611.

But, later on Wednesday, Dollar rebounded to pare back its losses and advanced against the Yen by 0.5 % to 97.47 yen. The Euro declined by 0.1% to $1.3376, while it rose against the Yen by 0.4% to 130.42 Yen.

The disappointing US durable goods data dragged down the Dollar on Monday. The durable goods order had declined by 7.3% in July, its steepest fall in nearly a year. This was against market expectations of only a 4.0% decrease. Since the US jobless and Housing Sales data had disappointed last week, this further added to the speculations that Fed might actually postpone the tapering of its monetary stimulus.

However, Dollar got a reprieve on Wednesday, as the simmering tensions in Syria over the possibility of a joint US military intervention spooked the market. The Syrian government is currently accused of using chemical weapons on dissident civilian populations in Damascus. The US strongly condemning this is mulling over a joint military intervention with its European allies. This sent the investors seeking Dollar as the safe haven currency boosting its demand.

Meanwhile, in the markets of emerging economies the greenback has been acting as a marauder relentlessly pummeling the currencies of emerging economies. Topping the list of plummeting currencies are India’s Rupee that depreciated by 23%, while the Turkish lira declined by 14% and the Brazilian real weakened by 17%. An exception to this phenomenon was the Chinese Yuan that rose by 2%.

Since the boost in Dollar from speculations of the Fed tapering its stimulus, the US Treasury yields have peaked to almost 3%. This has caused a sudden and massive flight of the foreign capital form the emerging economies back into the US. This greatly widened their Current Account deficit, with Indian economy dangerously close to breaching its 4.8% deadline.

Consequently, this wreaked havoc on vulnerable currencies of emerging economies, with Indian rupee plummeting to new lows every day. The Indian currency recently posted a new historic low of 68.82 against the Dollar, on Wednesday.

Thus, the rising Dollar and the Syrian crisis have further threatened the currencies of emerging economies. However, the FOMC minutes did not strongly hint at a tapering in stimulus by September. With the US economy posting disappointing data, the speculations of QE tapering next month grows weaker. This might possibly bring down Dollar and offer a brief reprieve to the emerging market currencies.