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Weekly Graphic Rewind: US Dollar Fails to Take Back NFP Losses

By Benjamin Spier
25 October 2013 19:34 GMT

Talking Points:

  • US Dollar unable to take back losses on NFP’s
  • Greenback entered a range after the jobless report
  • Friday’s USD gains may remind traders of upcoming debt ceiling

A look back at the past week of Forex trading using movements in the US Dollar Index:

US Dollar 1-Hour 17:00 10/20 to 12:00 10/25 EST

Weekly_Graphic_Rewind_US_Dollar_Fails_to_Take_Back_NFP_Losses_body_Picture_1.png, Weekly Graphic Rewind: US Dollar Fails to Take Back NFP Losses

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The above 1-hour chart of the Dow Jones FXCM Dollar Index perfectly displays the week in Forex- one major jobs report to send the greenback lower surrounded by smaller releases sending the dollar alternatively higher and lower.

The US Dollar started the week by erasing a small part of the earlier week’s losses. The greenback rallied against the Yen on a disappointing Japanese trade figure. Then, Tuesday’s trading was quiet leading into the unusual NFP release on a Tuesday, due to the delay of the original release that was scheduled during the government shutdown.

The non-farm payrolls release disappointed expectations and the US Dollar fell to a seven month low. Then, the Dollar Index decline continued on Tuesday night on better than expected Australian inflation data, hitting the low for the week.

The US Dollar began a rebound on a report on Wednesday morning that Chinese banks had written off three times as many bad loans in the first half of 2013 as they had in the first half of 2012. The news raised doubts over China’s ability to keep up the strong economic performance, and the US Dollar rallied on flows into safe haven currencies.

The rest of the week of US Dollar trading saw a range with a top around 10,400 and bottom somewhat above 10,350. The US Dollar rose back above 10,400 on Friday, along with a decline in US equities in the beginning of the NY session. The only headline seen during the rally was a comment by US Senator Paul, saying that he would hold up the Yellen nomination for Fed chief if there is no vote on his Fed transparency bill.

It is not clear if there was really a connection between the Paul comment, the USD rally, and the equities decline. But, the comments may have reminded traders that there is still instability in Washington, and seemingly easy decisions like the approval of a Fed chief may face problems, as may the next debt ceiling deadline waiting right after the turn of the new year.

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Charts created by Benjamin Spier using Marketscope 2.0

-- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to bbspier@fxcm.com .

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
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25 October 2013 19:34 GMT