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October 16th, 2014, 8:20 pm | By trader | Published in LUNCH IS FOR WIMPS | Comments on this postComments Off

The dollar maintained a steady position against a basket of other major currencies last week which was largely supported as concerns regarding the outlook for the global growth weighed heavily on sentiment ahead of the recently released of the Federal Reserve meeting minutes later that trading day.

The U.S. Dollar Index, which basically follows the performance of the greenback against a basket of six major currencies, inched up 0.05 % to 85.81 which was not very far from a four-year peak of 86.87 hit last week.

Market sentiment was badly hit last week following the International Monetary Fund cutting back its prediction for global growth may possibly not reach its pre-crisis level any time soon.

According to the IMF, it expects global economic growth of 3.3 % this year, down from 3.4 % last July and the added growth of 3.8 % in 2015, as compared to an earlier prediction of 4.0 %.

The demand for the safe haven yen was bolstered and USD/JPY lingered near three week lows of 107.75 hit overnight before retreating back slightly to trade at 108.19 which remained unchanged for that period.

The yen was boosted in its strength following the Japanese Prime Minister aired out its apprehensions regarding the effect of a weaker yen on the economy.

The Bank of England left monetary policy relatively unchanged at its policy meeting last week, however the institution acknowledged that the diminishing domestic demand as a result of sales tax increase during the second quarter, was leading to weakness from an economic point of view.

Investors were focusing their attention to the minutes of the Fed’s September conference for new indications of the possible future direction of the U.S. monetary policy.

The dollar rallied against the yen and the euro in recent months albeit growing expectations that the Fed is ever growing closer to increasing interest rates at the same time the central banks in Europe and Japan are most likely to remain with a much looser monetary policy outlook.

The EUR/USD reached session lows of 1.2623 and prior to the repeat of some of the previous losses of trade at the 1.2667 level.
The single currency still remained under pressure following the data released last week revealed a steep decline in German factory orders last August which added further concerns that the euro’s largest economy was being drawn back into the downturn.

The frail economic data added expectations that the ECB will soon be implementing fresh stimulus measures to help boost the needed growth.

According to the IMF Europe was experiencing a multispeed recovery which revised down its expansion and growth forecasts for the Eurozone three largest leading economies namely Italy, Germany, and France.

The Swiss franc and the pound dipped lower with the GBP/USD easing to 0.09 % to trade at 1.6083 and USD/CHF which likewise edged 0.13 % to 0.9578 correspondingly.

Moreover, the commodity connected dollars were roughly weaker, with the AUD/USD down 0.4 % to 0.8779, the NZD/USD eased down 0.26 % to trade at 0.7810 and the USD/CAD added 0.16 to 1.1181 respectively.

In Canada, data showed that the housing began to increase its figures by 197, 300 in September which beat expectations for an increase of 196, 000. Furthermore, August figures were adjusted to 196, 300 gain following a previously approximate 192, 400.

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