December 4, 2020

Elance360.com

Using the power of internet to make life easy

US Dollar gets Weaker on Thanksgiving, What’s next?

2 min read

US dollar today, 24th November, 2016, lost some of the gain it had made against several other currencies over the past few days. US dollar index is currently at 13-years high level. The driving force behind US dollar strength is the strong economy data and the speculations about December interest rate hike.

Few months back, the Feds stated [many times] that the next interest rate hike would depend on how fast the economy grows. Well, for the past few weeks, we are seeing only strong data, which is now fueling speculations about the possible December rate hike.

Many members of Feds have given indication that the next interest rate hike is going to come soon. The currency market is weighing these comments in favor of Dec rate hike. Many believe that Dec rate hike is imminent.

So, where is US dollar heading now, up or down? Traders are loving $ and it seems like this trend will continue as we enter the year 2017. Today, dollar is among the weakest currencies; perhaps the thanksgiving holiday in USA has something to do with it. The lack of volume coming from US traders and some profit taking has resulted in a weak dollar. This seems like temporary weakness, though.

I personally believe that US dollar is going to make a comeback next week, if not tomorrow. One of the best currency pairs to trade next week is USD/JPY. Yen has dropped to almost 8-months low against US dollar; I think $ will continue to build gains against Yen. However, there is some very important economy data coming next week; this includes ISM-Index, Unemployment rate, and Non-Farm Payrolls. If this data is disappointing, then we may see major weakness in US dollar. These few reports can seal the deal for Dec rate-hike if the numbers are positive. That would take the dollar index to new heights.

Trump winning the elections didn’t make US dollar weak; actually, it helped $ gain against its major peers. It seems like traders aren’t concerned about the political uncertainty that surrounds the president-elect Mr. Trump.

Few days of continuous gain of US dollar against Euro has brought EUR/USD to 1.0500 level. The price has bounced back a little and the pair is now trading around 1.0570. If the pair breaks the 1.0500 level, then I am going short with the level 1.0210 as my profit-taking destination. Euro zone is facing weak economy and political uncertainty; Trump winning the election has made things more worrisome for the EU.

Leave a Reply

Your email address will not be published. Required fields are marked *