The dollar index performed poorly on Tuesday, falling 0.4% at one point on the day, then gradually rebounding, but still negative for the day. Investors are waiting for the US non-farm payrolls data report, which is likely to be the key to the Fed's decision to cut back on bond purchases.
Us stocks rose, US dollar fell and US bond interest rates fell after Federal Reserve Chairman Colin Powell's dove speech at the annual meeting of the global central bank in Jackson Hole on Friday dispelled fears of an early announcement of Taper or even a hasty increase in interest rates.
Bloomberg quoted Khoon Goh, head of Asian research at ANZ, as saying:
Dollar bulls continue to sell positions after Powell's speech at Jackson Hole, and Friday's non-farm payrolls will be key data for the direction of market trading.A much better-than-expected figure could stop the dollar index from falling.
The median estimate of economists surveyed by Bloomberg suggests that U.S. employment growth is likely to slow in August, the highest increase so far this year in July.
According to NatWest Markets,A strong US jobs report could increase the likelihood that the Fed will start scaling back its bond purchases as early as next month, which bodes ill for high-yielding emerging market assets.
In other currencies, the euro fell sharply against a basket of currencies after Robert Holzmann, the governor of the Austrian central bank, an European central bank, said he was pulling out of the PEPP.
Commodity-producing currencies were among the biggest gainers against the dollar, with the New Zealand dollar and the South African rand up nearly 1 per cent on Tuesday.
As of this article, the dollar index rose 0.1% to 92.74.
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