The US dollar was unable to strike it lucky on Thursday and into Friday as expectations of a Federal Reserve rate cut were placed firmly back on the agenda.
Even an economic data release in the form of higher inflation statistics was unable to reverse the negative trend for the greenback.
Inflation in the US has gone up, with the country’s core consumer price index showing a 0.3% spike in June (with food and energy excluded). This data, which came out yesterday (Thursday), represents the highest spike in figures since the start of last year.
However, this did not help the dollar index, which is a tool designed to monitor how the US dollar is performing compared to six competitor currencies from around the world. It found itself going down by 0.1% and reaching 96.94. This represented what looked likely to be the largest downward change in almost one month.
The main focus for dollar traders this week has been the testimony of the Federal Reserve’s President, Jerome Powell.
The next big challenge for the dollar will be a speech from Chicago Federal Reserve President Charles Evans, who may give some clues as to what the bank intends to do next. This is due to occur at 2pm GMT.
Elsewhere, the New Zealand dollar rose thanks to the general decline of usually hegemonic currencies like the US dollar. The Kiwi dollar went up by 0.3% in the NZD/USD pair to $0.6665.
The single European currency also rose in this pair. It went up to 0.1% and reached the $1.1270 point. This was due in large part to changes in German bond sales, although the euro is also usually positively affected by declines in the performance of the US dollar.
Despite ongoing political problems in Britain, the British pound managed to rise by a fifth of a percentage point in the forex markets. This was again largely due to the decline in demand for the US dollar, as tensions over Brexit continue to occur.
According to some media reports, politicians are discussing whether or not the Queen – who is nominally part of British political life but is entirely ceremonial – may have to decide between following the advice of a potential future Prime Minister or following the wishes of parliament, which may differ.
Perhaps the next big international challenge that the forex markets will have to deal with will be the trade battle between the US and China, which continues to persist.
It is understood that at the recent G20 summit the Chinese President, Xi Jinping, told US President Donald Trump that China would raise the amount of American agricultural output which it bought. However, in a recent tweet, Trump said that this had not occurred – a move which risks spooking the forex markets.
Trump’s tweets also affected cryptocurrencies markets. He said in a post on the social networking website that Facebook’s proposed cryptocurrency, Libra, would need to be heavily regulated before it could go into operation.