US Dollar: Best Monthly Performance in 10 Years

Friday saw the US Dollar going down but it posted a best month’s showing not seen since a decade ago.  

Dollar Still Strong

Investors however were not impressed as they said that the Dollar surged too fast and too far.  July data showed an unexpected decrease in personal income of Americans thus triggering a slowdown in domestic spending.  Inflation and the diminishing impact of government stimulus were seen as contributing factors.  Despite all these, trading was generally unaffected.

The Euro meanwhile stood firm as policy makers made positive statements on raising interest rates despite the continuing inflation problems of the euro zone and weak market sentiments.  According to a member of the European Central Bank, inflation is still very high.

In the final round up of the month, the US Dollar edged all of its competitors gaining a 5 percent high, its best record since January 1997.  

The surprising US growth and the increasing foreign demand for US durable goods in the second quarter eased up concerns on the state of the US economy.  The numbers showed consistency on the continuing rebound of the US but the financial markets are still wary of the situation.

The days trading in New York saw the US Dollar index down by two percentage points closing at 76.981 while the Euro went up by 0.2 percent closing at $1.4727.  The Yen continued to resist the US Dollar as the latter was down 0.8 percent at the close.

According to Greg Salvaggio of Tempus Consulting, the US economy could be nearing its bottom.  Salvaggio added that despite this, the Dollar did not react owing to shortage of players at the market due to a long holiday weekend.

Pound Continues to Fall

The British Pound on the other hand continued its very dismal performance as it slid farther registering a 7.7 percent drop for the entire month, its biggest since 1992.  

The deterioration of the Pound was attributed to the worsening economic crisis in the United Kingdom.  All indicators showed that the British economy is halting worsened by the crash of UK’s housing market.  Because of this, the Pound could get worse in the coming months of trading.

Speculative sentiments remain high in the market as investors are expected to sell into any dollar, cashing on its strength as the month closes.  Investors are also anticipating the release of the August report on US employment situation and the policy decisions of European and UK central banks.  All these could affect the markets significantly in the coming week.  

The market is also watching developments of world events as Russia is poised to restrict oil shipments in response to EU’s threat of sanction because of the Georgian conflict.