Analysis of the past week

The last week of January turned out to be full of news. The market has fully recovered from the New Year holidays and gained working pace. At the same time, last week was very restrained for the US currency, despite the fact that the dollar closes the week in the red or near zero against most competitors. The saving circle for the American by the end of the week was data on employment in the US, which allowed the American to recover significantly on Friday.

Despite  dollar’s attempts to grow and very positive data on employment in the US, as well as positive signals from the Fed (The meeting was held in the week. According to the results of the meeting, the next rate increase is expected in March) the market negatively looks at the US currency and keeps the downtrend on it.

The market can not forget the words of the US Treasury Secretary about the advantage of a weak national currency of the US government. In addition, the market shifts attention to other world economies that are considering or winding down incentive programs, such as the eurozone, the UK and Japan. In this situation, the currencies of these countries look more promising even against the background of higher rates in the US.

Similar sentiment in the market confirms a steady downward trend in the US dollar, which despite strong employment data remains in a sideways trend.

Graph of the US dollar index. Current price – 89.20

Also, in the past week, a verbal intervention of the Japanese yen took place. After the profitability of Japan’s state bonds crawled up, the Bank of Japan announced its intention to resume the repurchase of the national bond, thereby scouring yen investors and breaking the upward dynamics of the Japanese currency, which was traced at the beginning of the week. Despite the intentions of the Bank of Japan, further decline in the yen is difficult due to the oversold and overall strength of the currency against the backdrop of the growth of the Japanese economy.

Hanzenko Anton