- Dollar Strength Fades Slightly on Optimistic Mood
- Fed Step Back From Tapering Talk
- Wall Street Given Much Needed Boost
The forex market bounced back slightly moving into the middle of this week. A Euro which has been under severe pressure at multi-month lows has managed to turn something of a corner. The currency remains at lower than usual levels against the Dollar but is bouncing back. This comes ahead of US durable goods data and on the back of relaxation of Fed talks surrounding tapering. The overall market mood is more optimistic. This has been reflected on Wall Street with back-to-back positive days.
Euro Revival Begins Even on German Data Disappointment
The Euro has been languishing at or below 1.17 for the best part of the last week. Those forex trading the currency has experienced the lowest points within the last 9 months from the pair. This has started to turn around moving into midweek as the Euro has taken advantage of a let-up in US Dollar strength. The pair is now trading above 1.175 even as German business climate numbers missed at 99.4.
The Dollar move lower comes ahead of US Durable Goods Order numbers that are due to be released. There are also several other factors at play that have taken the shine away from the greenback. These include a stubbornly high COVID-19 case count that is still hitting around 150,000 daily cases. This has even pushed the Fed to move their Jackson Hole Symposium to meet entirely online.
Economic Support Likely to Continue
Forex brokers and traders alike, as well as many industry analysts, expect that this move from the Fed to meet online could give an indication as to how they will approach economic support at least in the short term. There has been much concern and rumor that they may be moving to tighten up, with particular talk of tapering.
This may now have taken a back seat though with Fed Chief Jerome Powell reported to be staying away from the topic of tapering when he speaks on Friday. It now seems increasingly likely that he will continue in the very supportive tone that he has taken since the beginning of the pandemic. The focus will be widely on his speech to end the week.
NASDAQ Record as Markets Bounce Back
There was also a strong recovery on Wall Street Tuesday with another positive day. The NASDAQ moved up to close above 15,000 for the first time with a new record as traders continue to carry forward a sense of optimism. A potential peak in Delta variant cases seems to be providing a sense that the worst could be over for the pandemic.
Again, all eyes will be focused not only on US data released today, but very much on Jackon Hole toward the end of this week to see how the Fed will handle the question of tapering, and what further economic boosters may be in store.