Fed Uncertainty Continues to Hurt the U.S. Dollar

The dollar licked its wounds on Friday, holding near a seven-week low against a basket of currencies, following losses over five straight days sparked by U.S. payrolls data which fell short of market expectations.

Traders say the dollar’s precipitous fall reflected uncertainty over how soon the Federal Reserve will start reducing its stimulus, as well as signs of improvement in other economies, such as China and Europe.

The dollar’s index against a basket of six major currencies hit a low of 80.868 on Thursday and last stood at 81.04, little changed on the day but within sight of its June low of 80.498.

“Essentially, the dollar has been falling after the payrolls numbers were weaker than expected. But I think the dollar is just testing the lower end of its range rather than entering a fresh downtrend. Sentiment may change if upcoming U.S. data, such as retail sales, shows strength,” said Minori Uchida, chief FX analyst at the Bank of Tokyo-Mitsubishi UFJ.


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