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Dollar Forex Market Decline Continues

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  • USD Moves Keeps Moving Lower on Market Mood
  • EUR & GBP Advance as China Weakens
  • US Equities Markets All Positive on Month

The US Dollar forex market is continuing to show weakness on the back of the Fed message from the end of last week. This dovish message has given a more protracted boost to market sentiment. The positivity exhibited by those trading the market has meant a fall off in the safe have Dollar, and a boost for other currencies it trades against. This includes both the Euro and Pound which had previously been struggling. Both are now continuing to advance. At the same time, stocks on Wall Street are looking to close out yet another positive month.

Fed Support Continues to Drive Dollar Lower

Moving into the weekend, Fed Chief Jerome Powell clearly signaled that the Fed would be in no hurry to taper bond buying as widespread economic support continues. This has been reflected in a very positive turn in market sentiment. Those forex trading the Dollar previously, had all but priced in tapering to come very soon. The fact this is not the case has seen the Dollar continue downward into this week. 

There have also been other contributing factors to the move. These include the dropping of treasury yields which has had the impact of further boosting stocks while contributing to holding the Dollar at lower levels. Not even a rising number of COVID-19 cases, or the ongoing issues with the pullout from Afghanistan could manage to dampen the present mood in the market.

Other Major Currencies Continue Forward Push

As the Dollar has dropped back, forex brokers have noted that other major currencies including both the Euro and Pound have taken advantage. Sterling has moved up well above 1.38 after the long weekend there to start August. This solely seems to be based on Dollar weakness though, as the currency would seem to have its own domestic issues to deal with.

COVID cases in the UK are still continuing to increase, and while it is not likely to lead to a rollback on the national reopening, it remains a point of concern. Brexit is another key issue for the UK which has not simply gone away through the pandemic. Although adopting something of a lower profile, it has still been acting as a drag on the Pound.

Stocks Looking to Close Out Winning Month

Even though the early trading on Wall Street has started out flat today, the days since the wrapping up message of the Jackson Hole Symposium have been widely positive. This has set the major indices on track for another positive month as we reach the end of August. 

The NASDAQ, S&P 500, and Dow Jones are all positive for the month, and in the case of the S&P 500 it will be its 7th positive month in a row. The continuing positive mood, being matched by numbers has left many analysts wondering just how far markets can keep climbing.

Anthony is a financial journalist and business advisor with several years’ experience writing for some of the most well-known sites in the Forex world. A keen trader turned industry writer, he is currently based in Shanghai with a finger on the pulse of Asia’s biggest markets.

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