© Reuters. The dollar witnessed a volatile session and hovered around the level of 102.00 points, what is the reason?
Arabictrader.com – The US dollar witnessed a volatile session during trading on Tuesday, as it continued to trade around the 102-point level, after recovering from its losses in early trading during the Asian period, with investors anticipating the release of PMI data for the manufacturing and services sectors in the United States, and more important data This week, before the Fed meeting next week.
The most important factors that affected the dollar’s movements today
The dollar witnessed a weak start to trading today during the early Asian session, as the lack of liquidity, along with the Lunar New Year holiday in China, which extends until the end of this week, led to the American retreat below the level of 102.00 points, which the dollar kept trading below during a large part of the session. yesterday’s dealings.
The dollar is currently going through a period of uncertainty, which prompted it to struggle to maintain trading around the 102.00 level, amid increasing investor fears of a recession in the US economy, which caused downward pressure on the dollar, but on the other hand, fears of major European economies remain providing some support. for the green currency, which enabled the dollar to hold at this level.
And with the end of the statements of the members of the US Federal Reserve last week, in anticipation of the meeting of the bank’s monetary policy committee – the Federal Open Market Committee – next week, investors are waiting for more signs to move forward, with anticipation of the release of some important economic data in the United States, which would affect the movements. dollars this week.
It is scheduled to release PMI data for the manufacturing and services sectors in the United States, which will reflect the activity in the two sectors during the month of January, and this data may be able to provide some bullish momentum for the dollar index if it is positive, as it may reduce the impact of the very negative data recorded by the United States during last week, but it may also push the dollar towards a decline below the 101.00 level, in case it was very negative, as it might then support the recession scenario.
At the same time, investors are also awaiting the release of US gross domestic product data on Thursday, which will reflect the actual performance of the US economy, as well as the personal consumption expenditure index, which is scheduled for release on Friday, and the two indicators will likely greatly affect dollar trading as well. .
On the other hand, the statements of the more hawkish European Central Bank members than those issued by the US Federal Reserve members last week continued to affect the dollar’s movements today as well, as market expectations now indicate that the US Federal Reserve may suffice with raising interest rates by only 25 basis points at its next meeting, especially after The calls of a number of Fed members, but there are also some expectations that the bank may raise it at the same pace as before, by 50 basis points.
These expectations about the US Federal Reserve’s decision come at a time when most members of the European Central Bank are calling for a 50 basis point hike in interest rates to reduce inflation, which is still very high, and significantly higher than the bank’s rates, which supported the euro and pushed it to its highest levels. In early 9 months of trading during the Asian session.
However, despite this, the euro lost its bullish momentum with the progress of the session and the opening of the European session of the currency market, as the data of the diversified purchasing managers’ indicators for the services and manufacturing sectors in France and Germany cast a shadow on the performance of the euro, and reinforced the uncertainty of investors, which exposed the euro to selling operations against the dollar, especially with Investors tended to sell the European currency to take profits, after the euro reached this high level.
Simultaneously, the dollar was unable to get some support from the US, as bond yields witnessed a decline during today’s trading, due to growing recession fears, which overshadowed the dollar’s profits.
In terms of trading, the dollar index – which measures the performance of the US currency against a basket of 6 other major currencies – rose slightly, by 0.06%, to settle at approximately 102.084 points.
As for trading in currency pairs, it settled at $1.0864, while the Japanese fell by 0.30% to record 130.29 yen, while it fell against the dollar by 0.68% to reach $1.2295, after the negative data of the PMI for the manufacturing sector.
This is while the US dollar settled against the Canadian dollar at 1.3361 Canadian dollars, while it declined against the US dollar by 0.20% to 0.7015 US dollars, and the US dollar was able to rise against about 0.28%, recording 0.9247 francs.
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