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US Dollar Resumes Upward Trend

H.S. Borji
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US Dollar Resumes Upward Trend

The US dollar advanced slightly against a basket of currencies Friday, as US Independence Day kept trade volumes light ahead of an active release schedule next week.

The US dollar index – a gauge of the greenback’s performance versus six commonly traded peers – advanced 0.08 percent to 80.28.

The dollar received a boost this week after the Commerce Department said US employment surged in June, advancing 288,000. A median estimate of economists surveyed by Bloomberg called for a gain of 211,000.

The unemployment rate fell 0.2 percentage point to 6.1 percent, a nearly six-year low.

June marked the fifth consecutive month job growth was above 200,000, the first stretch of its kind since 1999-2000. The US labour market has added an average of 272,000 jobs per month over the last three months, according to the Labor Department.

The EURUSD declined further Friday as German factory orders declined. The pair has been subdued in the latter half of the week as the European Central Bank took its hands off monetary policy, opting instead to monitor ongoing developments in the currency region.

The EURUSD fell 0.14 percent to 1.3588. The pair faces initial support at 1.3582 and resistance at 1.3652.

The greenback was unchanged against the British pound, as the GBPUSD held steady at 1.7153. The pair faces initial support at 1.7114 and resistance at 1.7183.
The USDJPY declined but held steady above 102.00 after the pair surged ahead on the heels of the US nonfarm payrolls report. The USDJPY was trading at 102.05, declining 0.11 percent. The trend line shows initial support at 101.86 and resistance at 102.41.

The US dollar held steady against its Canadian counterpart, as USDCAD traded at 1.0638. The pair faces initial support at 1.0607 and resistance at 1.0671.
The US dollar faces an active week following the Independence Day long weekend. The Federal Reserve on Wednesday will release the minutes of its June policy meetings, which will be closely monitored for signs of future policy.

The Fed downgraded its 2014 growth forecast at the June policy meetings and said long-term inflation will probably trend below the historical average of 4 percent.
Earlier this week Fed Bank of San Francisco President John Williams said the central bank won’t rush to raise interest rates, as the US economy isn’t expected to return to full employment until sometime in 2016.

On Wednesday Federal Reserve Chair Janet Yellen defended the central bank’s accommodative policies, extinguishing criticisms that lower interest rates are destabilizing the banking sector through increased risk-taking. According to Yellen, greater risk-taking could be mitigated through existing regulatory tools.

The Fed has kept interest rates near zero since December 2008. The markets are timing the first rate hike for mid-2015.

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