US DOLLAR INDEX TECHNICAL ANALYSIS AND US MARKET NEWS - US DOLLAR INDEX
US DOLLAR INDEX: NEWS & TECHNICAL
Dollar Edges Lower; Euro Recovery Gains Traction
As a fledgling euro comeback picks up steam, the U.S. dollar slipped lower in early European trade on Wednesday, retreating from the 20-year top hit earlier in the week.
The Dollar Index, which compares the value of the dollar to a basket of six other currencies, started the week at a fresh two-decade high at 109.48 and was trading 0.1% lower at 108.662 at 3 AM ET (07:00 GMT).
The JOLTS report on job vacancies, the most recent U.S. employment statistics, indicated that the labour market remained strong despite the Federal Reserve’s repeated, significant rate increases.
This, together with persistent hawkish remarks from several Fed officials, indicate that the U.S. central bank will most likely increase interest rates by 75 basis points in September.
The European Central Bank members have joined the fight to combat inflation and have expressed a strong commitment to do so at the Jackson Hole symposium, but the dollar is failing to make any more progress in this regard.
Joachim Nagel, the head of the Bundesbank, said on Tuesday that the ECB must take decisive action to control inflation, while Pierre Wunsch, the head of the Belgian central bank, said that interest rates must rise to a point where they begin to restrain economic activity or above what is regarded as the “neutral” rate.
The euro, which makes up about 60% of the dollar index and has benefited from this hawkish testimony as the single currency has risen over 1% from its two-decade low on August 23, plays a significant impact in the trajectory of the dollar as a whole.
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