We can probably say that the Greenback Bull run has ended, however, with the struggle of the US currency in the recent months, I would like to think that somehow, the US dollar will probably pick up again and back to Bull on the run.
On Wednesday, Sept 7, 2016, the dollar decline to its lowest in over a week compared to the yen as downcast U.S. data made an interest rate surge this month not likely and drove investors to reduce fortunate bets in the dollar.
The greenback declined 0.5% at 101.45 yen after declining as low as 101.20 before, its lowest since Aug. 26. When Fed Reserve chair Janet Yellen gave a positive speech on the economy that revitalized bets of a rate hike in the short term.
Ever since then, the greenback has been struggling to make headway and dropped more than 1% compared to the yen on Tuesday.
Looking back on September 2, 2016, The dollar rebounded a one-week low compared to the other main currencies, in spite of the release of unsatisfactory U.S. economic reports.
The report came following the U.S. Labor Department stated that in August the economy puts additional 151,000 jobs, disappointing anticipations for an increase of 180,000. The figure of jobs created surge by 275,000 in July, whose figure was revised from a previously projected 255,000 increased.
The U.S. unemployment rate remained unmoved at 4.9 percent this September, confounding anticipations for a downtick to 4.8 percent.
The report also showed that average hourly earnings surge 0.1% in August, below expectations for a 0.2 percent increase and after a 0.3 percent increase the prior month.
On Tuesday, the USD/JPY pair initially tried to increase during the course of the session, however, it turns right back around to create a negative candle. Eventually, this is a market that should remain to grind all the way down to the 100 level if we do get a momentum. However, we are in an range where we could find sufficient support to turn things back around and create a bit of a supportive candle that would be a good buying prospect.
In addition, the US Dollar exchange rates eased lower during last week’s trade as several sets of unsatisfactory US data failed to support the markets’ expectations of a Fed interest rate hike being possible in September.
Although the US Dollar’s latest performance is mixed, we still believe a December 2016 rate hike is possible, the USD will not go that low without a fight.
However, the currency’s recovery rally already appears to be finished, which means there is a possibility for the USD/JPY exchange rate to weaken more.
As weak U.S. service sector data darken the economic outlook and elevated uncertainties over whether the Fed will increase interest rates this year, the dollar decline compared to the other major currencies this Wednesday.
As the Fed Reserve has repeatedly emphasized the correlation between the US job market and the path of interest rates, this underwhelming Non-Farm Payrolls (NFP) report destabilized expectations of a Fed rate hike happening in the near future.
Eventually, I really don’t think that we are rather prepared to make a decision yet, but we should not be surprised to see some sort of bullish action sooner.
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