The U.S. dollar has maintained its strong upward momentum, extending its gains for the fourth week in a row. The Dollar Index, which gauges the dollar’s strength against a selection of major currencies, climbed to around 104.25, marking a robust weekly rise of 0.75%.
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The U.S. dollar has continued its impressive uptrend, now marking its fourth consecutive week of gains. The Dollar Index, a measure of the dollar’s strength against a basket of major currencies, rose to approximately 104.25, reflecting a solid three-quarter percent increase on a weekly basis. This sustained rally underscores the greenback’s resilience, bolstered by strong U.S. economic data and shifting global market conditions.
As we look to the coming week, several pivotal events are likely to influence the dollar’s trajectory. One such factor is the European time change, which will alter market schedules and potentially impact trading volumes. More significantly, the release of the U.S. core Personal Consumption Expenditures (PCE) Price Index and the Bank of Japan’s rate decision on Thursday will be crucial. These events are anticipated to set the tone for investor sentiment, with the PCE Index providing insight into U.S. inflation trends and the Bank of Japan potentially indicating adjustments to its long-standing loose monetary policy.
On the currency front, the EUR/USD pair remains under pressure, struggling below the 1.0800 mark, down from its September peak above 1.1200. Meanwhile, the USD/JPY pair has breached the 152.00 level, marking its highest point since July. The Japanese yen’s depreciation highlights the U.S. dollar’s dominance, fueled by the divergence in U.S. and Japanese monetary policies.
Looking ahead, increased market volatility is expected with the release of U.S. labor market data, including ADP Employment Change and Nonfarm Payrolls (NFP). Market analysts anticipate moderated job growth, with the NFP forecasted at 140,000—significantly lower than the previous month’s 254,000 figure. This could influence expectations around Federal Reserve rate cuts, currently leaning towards a smaller 25 basis point cut.
In India, the USD/INR pair traded within a narrow range this week, hovering near all-time highs. Exporters found favorable opportunities for hedging due to the dollar’s strength and stable trading patterns. However, foreign outflows from Indian equities continued, with Foreign Institutional Investors (FIIs) marking a net sell for the 19th session, partially redirecting funds to China. India’s foreign reserves dipped for the third consecutive week, down by $2.16 billion to $688.26 billion as of October 18.
Overall, the combination of a robust dollar, potential Fed rate adjustments, and geopolitical shifts will likely keep global markets on edge, impacting currencies like the rupee. The coming days will be crucial for defining the dollar’s next moves and assessing its long-term resilience.
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