The US dollar continued its highly positive run of the last week or so on Thursday after it hit a one-year high against a collection of other major global currencies.
It went up by 0.37% to 95.432 against the DXY, which represents six big international currencies including the British pound, the Japanese yen and the Euro.
A range of factors contributed to the dollar’s meteoric rise this week.
One of them was Federal Reserve Chairman Jerome Powell’s upbeat remarks to the Senate’s Banking Committee earlier on Tuesday and Wednesday. Powell said that he believes the US economy is on track to expand in the coming years. The Federal Reserve, which he leads, is expected to raise interest rates not once but twice across the rest of 2018.
But Thursday also saw wider developments in the forex markets which pushed the dollar to the head of the queue.
The People’s Bank of China, for example, is now loaning credit to Chinese firms in an attempt to mitigate against the effects of the tariffs imposed upon the country. Also, this week, the Ministry of Commerce in the country said that it would take steps to ease the impact of American tariffs on metal.
The move meant the US dollar/Chinese yuan pair rose significantly, and the dollar managed to hit an annual high there as well.
Despite earlier signs that the ongoing trade issues between the countries might be approaching resolution thanks to increased communication between the two sides, a diplomatic spat this week appeared to put a stop to this.
An adviser to Donald Trump, Larry Kudlow, accused Xi Jinping, the Chinese leader, of standing in the way of talks between the two nations to achieve a trade deal. China, however, hit back, and said that these accusations were “bogus”.
Looking ahead to next week, there are plenty of major calendar events on the horizon for forex traders to look out for.
On Monday, a major set of US home sale statistics will be released at 2pm GMT. Given that these are often seen as indicators of consumer confidence, they are likely to be watched closely by the forex markets.
But it will be on Tuesday that the main releases come. The latest New Zealand trade balances, imports and exports will be released at 22.45pm GMT, while Japan will release its leading economic index and coincident index at 5am on the same day.
On Wednesday, meanwhile, the Australian consumer price index will be released at 1.30am GMT – and with both year-on-year and quarter-on-quarter statistics published, there’ll be a range of data for traders to use.
Thursday next week will see the release of ongoing US jobless claims. While over in Europe, the European Central Bank will release its monetary policy statement at 12.30pm GMT.
Finally, Friday will see a range of releases. British house price data will be released at 6am GMT, while the American gross domestic product index data for the second quarter of this year will also be unveiled.