The dollar index extended its weekly decline on Friday after a better than expected jobs report in the US lifted equities at the cost of safe-haven assets. Unfortunately at present for the dollar the only attraction is that of safety, since the US economy’s future remain very uncertain and therefore the dollar has not been seeing bids from speculators better on interest rate hikes. On any occasion when there is firmer data, even from the US, lifting sentiment the dollar is likely to suffer until the US puts a string on solid data releases together suggesting that the economy may finally be gathering some real momentum toward recovery.
Looking ahead, it is likely to be a quiet day of trade in the rest of Asia and the European session as the US is closed for Labour Day. As such we have a very light economic calendar and liquidity is likely to be thin, we suggest some caution since trade can take on a whipsaw nature in such conditions.
Written by Jonathan Granby, DailyFX Research Team.
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