- Dollar Strength Pushes Currencies Back
- Euro and Pound Both Hampered
- Stocks Drop to End Week
The US Dollar forex market has bounced back in an ever stronger fashion to finish the week and maintain heavy pressure on the other major currencies in the market. In particular, the Euro and Pound are continuing to feel the weight of a resurging Dollar. A weaker market mood, in general, has enabled this move which has also seen the stock market close lower to end a multiple-week run of positive finishes. Traders will be hoping that any kind of risk-on mood returns quickly to ease downward pressure.
Stronger Dollar Continues to Maintain Dominant Role
The Dollar has a long history as a global safe haven currency. This role has been defined and proven time and again in periods of uncertainty, be it economic or otherwise. Again during the current period, the USD is showing this position as those forex trading other currencies move back toward the relative security of the Dollar. The US Dollar Index which measures the strength of the currency against other major currencies is at a six-week high above 108.00.
This is a turnaround from the beginning of the week when it was felt that the currency was weakening and allowing gains from other areas of the market including the Euro. This has not materialized in part due to more hawkish commentary from the US Federal Reserve. Several policymakers are echoing sentiments that further rate hikes are imminent and that the economic challenges are far from over.
EUR & GBP Both Struggle to Keep Pace
Such negative comments from key members of the Fed in the US have helped the USD to gain even more ground. This is much to the detriment of both the Pound and Euro, both key assets with forex brokers against the Dollar. There is very little if anything the currencies can do to battle against the Dollar aside from waiting for a change of mood.
At the time of writing, the Euro was very close to parity with the Dollar and with a general expectation that the common currency could lose more ground. The Pound meanwhile hit a six-week low point during the day below 1.18 before finishing above that point just slightly.
Wall Street Suffers Dip as Sentiment Shifts
Stocks on Wall Street have not missed out on the changing feelings either. After charting several positive weeks back to back, the major indices in the US finished the day, and week lower, all three suffering some level of loss.
The Dow Jones shed almost 300 points on Friday to close out the week with a slight loss of 0.16%. At the same time, the S&P 500 lost all of its weekly gains too on Friday, dropping over 1%. The Nasdaq rounded off the losses, dropping just about 2% on Friday to end the week down by more than 2.5%. Traders will be hoping for a turnaround come Monday.
