By Dan Eduard
Market volatility was low at the beginning of this week, as a slow news cycle failed to generate significant amounts of trading activity. That all changed on Wednesday, when a speech from Fed Chairman Ben Bernanke caused investors to overwhelmingly short their USD positions. Bernanke sounded a pessimistic note with respect to the US employment sector and budget deficits. As a result of the speech, the EUR/USD took off, reaching as high as 1.3742 by the end of the day. The USD/JPY dropped close to 30 pips, while the GBP/USD moved up close to 80.
The markets shifted course on Thursday, following the release of the latest US Unemployment Claims figure. The figure came in at 383K, well below initial estimates and represented a 2 1/2 year low in new jobless claims. Investors reverted back to the greenback as a result, and the currency moved up against virtually all of its main counterparts. The EUR/USD dropped close to 100 pips as a result, while the USD/JPY went as high as 83.35 before the end of the day.
The USD remained bullish to close out the week, as the combination of renewed confidence in the US economic recovery continued to grow, while fresh concerns regarding European debt drove investors to the greenback. Whether or not the greenback can maintain this trend into next week is yet to be seen. Next Wednesday in particular looks to be a particularly big day for US fundamental news. Positive results from any of the more significant economic releases are likely to generate more momentum for the dollar.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
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