Andrew Bezen

Financial Writer


Dollars slips lower as U.S wage falls in the economy

There has been a massive chaos in the global market in the last week as the investors were in doubt about the next movement of the green bucks. Though the dollar tried to recover some of its losses against its major rivals in the global market but eventually bearish took control of the market prior to market closing. There has been a strong negative U.S consumer sentiment in the recent days Mr. Trump failed to keep his promise as the newly elected president of U.S. After the U.S presidential election held on 8th November 2016 he stated that fiscal spending will be increased and tax cut policy will be implemented soon to ease the sufferings of the U.S citizen. However, three months have been passed there has been no initiative from the Mr. Trump to keep his promise and most importantly he has been creating extreme sentiment into the consumer’s mind. If things continue to go like this than there is strong chance that we will see a long-term weakness in the greenbacks. Due to the recent weakness of the green bucks, the Aussie dollar has broken a critical bearish trend line in the market which clearly impose a threat on the dollar bulls.

Decline in the U.S wage: In the last week the green bucks exhibited chaotic movement and finally tumbled down in the market after the bad news release on the U.S wage. Most of the professional investors were expecting a decent rise in the U.S wage after the strong unemployment data in the last week but the market was surprised to see the unexpected data of the U.S wage. On the event of that major news release, the green bucks become broadly lower against its major rivals in the global economy in the global market. The leading economist are now concern about the long-term outlook of the green bucks as FED has already project three possible rate hike in the year 2017 and such a negative release is definitely going to affect the U.S interest rate hike decision. However, the dollar bulls are not completely out of fuel in the market as the green bucks still remain broadly supported since the U.S central bank will pressurize the FED for at least two possible rate hike before the month of November. If the FED fails to go for at least two rate hike before the month of November than inflation rate will not be adjusted by the U.S central bank and thus the country might face a huge economic crisis in the long run.

Effect of Trump admiration: The green bucks gained the strongest momentum in the last year after FED hike their interest rate on the basis of 25 points in the global economy. The U.S dollar index which is the over the measure of the green buck’s strength against the six major rival’s currencies rallied higher and secured 14 years record high. However, after hitting that level, the dollar index has been under extreme pressure and most of the leading investors are now thinking that the bullish run of the dollar is now at its end. However, the leading economist researchers are still optimistic about the green bucks since an imminent hike in the interest rate will fuel the dollar bulls again in the market. On the contrary, the newly elected president is currently wanting a weaker dollar since he seems a longer term benefit in weakening the dollar in the global market. The last month performance of the green bucks is the worst performance of the mighty U.S dollar since the last 30 years in the U.S history. Many leading investors are thinking that the dollar bulls will have a time in near future as Mr. Trump has no interest so far to strengthen the dollar in the global market.

The overall economic performance of the U.S dollar: In the last week the dollar traded lower against its all major rivals in the global economy and most of the leading investors are now thinking a major trend change in the U.S dollar index. The green bucks were down by 2.3 percent against the Japanese Yen which is by far the weakest performance since July 2016.In the last trading week, the U.S unemployment claim also rises by 4.8 percent causing a strong bearish sentiment in the U.S dollar. However, the optimistic dollar bulls are waiting on the sideline to come in action as there is a decent chance of another rate hike in the month of Friday by the FED. If the FED manages to hike their interest rate in the FOMC meeting minute on March then we might see another bullish rally in the green bucks in near future. According to the leading researcher of CME Group, there is near about 60 percent chance that the FED will hike their interest rate in March meeting. On the other hand, there has been 0.1 percent increase in the average hourly income whereas the forecasted data was 0.3 percent. There has been also a drop of 0.1 percent in the U.S dollar index and traded at 99.666 in the global market.

Summary: There has been a massive confusion regarding the U.S economic performance in the recent days as the Mr. Trump is trying to devaluate the dollar in the global economy. There has been a slip in the U.S dollar index and most importantly the U.S wage data also didn’t come out as expected. Considering the overall parameters the green bucks is currently under extreme selling pressure where FED is the only hope for the dollar bulls.

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