Risk Aversion Supports Dollar Forex Market

• USD Stronger Again on Friday
• GBP Posts Losing Week After Rate Hike
• Slight Improvement for Stocks

The US Dollar forex market pushed back to end the week stronger again on Friday. Hawkish commentary continues to extend the risk aversion already seen in the market even following the recent strong rate hike from the Fed. This has impacted other currencies too. The Pound fell following some marginal gains on Thursday as the UK also raised rates. The Euro also traded poorly on Friday as the US Dollar Index extended its comeback. There was also a slight positive movement in the stock market to end the week, though it has still been negative for the major indices.

Dollar Strength Continues Amid Caution

The US Dollar has pushed back firmly to end the week in a strong position against other major currencies. This comes after the Dollar gave up some ground on both Wednesday and Thursday even if other currencies like the Euro and Pound failed to take advantage of the momentary weakness. Their chance evaporated on Friday as rising Treasury Yields combined with fearful commentary from analysts pushed the US Dollar Index higher. 

The Index, which measures US Dollar strength against a basket of other major currencies had been at multi-year highs before dropping off in recent weeks to a certain extent. Those forex trading the Dollar have seen it come back strong to end this week, however, peaking above the 105.00 mark, a very strong position. 

Rate Increase Fails to Raise Pound

Both the Pound and Euro have endured a battling week. Having been higher in recent weeks, the higher inflation figures and concerns that brings to the market really worked against both as the US Dollar exerted its position as a safe haven currency yet again. The Euro has not been helped as it continues to slide following what was deemed less than hawkish comments from the ECB. This is somewhat of a divergence from the US Federal Reserve position and has hampered the currency.

The Pound made up some ground on Thursday following a 25 basis point interest rate rise from the Bank of England. It has since surrendered this gain in the face of everlasting strength from the Dollar. Again, this divergence from the US Fed with its 75bps increase seems to have favored the US currency at forex brokers. 

Slight Gains but Weekly Negative for Stock Market

Wall Street has toiled through the week with seemingly no positive ending in sight. Trading on Friday was no different being both volatile and indifferent. The results were mixed for the three major indices. The Dow Jones slipped slightly, the S&P500 gained a little, and the Nasdaq added more than 1%. 

Still, these late gains have not prevented another negative week. The S&P posting its worst since 2020 and the other major markets also falling significantly. Despite these falls, there still seems to be no relief from the ongoing inflation issue.