THE TAKEAWAY: After a volatile start to the week, the US Dollar ended higher as the Yen weakened and Euro-zone worries resurfaced.
A resurfacing of US debt ceiling concerns on Monday saw a sharp fall in the S&P500 index, and a rally in the US Dollar as investors sought the safer asset. Asian stocks opened higher in Tuesday trading on the back of the China Securities Regulatory Commission Chairman implying that China could increase the quota for foreign investors to invest in domestic stocks. This saw the Greenback sell off in Asian trade as the main Asian Indexes surged higher.
Tuesday saw increased volatility as newswires reported that markets were beginning to price in a potential Euro-zone break up which saw the Euro fall sharply forcing the USDOLLAR index higher. After a period of consolidation, the Euro was again in the spotlight as Germany cut its growth forecast citing Euro-zone worries and weak demand within the region as the catalyst.
After these volatile moves higher, the Dollar started to trend upwards less aggressively toward the end of the week as the Yen weakened and the Australian Dollar lost ground. Australia’s relatively weak employment data saw the so called ‘Aussie’ fall and as trading comes to a close before the Bank of Japan’s meeting, the Yen lost ground potentially due to speculation that Tuesday could see aggressive monetary easing from the Bank.