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We saw continued misery for USD bulls this week as the Greenback started and stayed under pressure from the get go. Expectations that the Fed would announce changes to monetary policy were the likely driver, which ultimately came to pass to send the dollar even lower.

Broad risk sentiment was also a likely contributor to the dollar’s weakness as traders had positive COVID-19 and geopolitical related headlines to feed their risk appetite. 

Overlay of USD Pairs: 1-Hour Forex Chart
Overlay of USD Pairs: 1-Hour Forex Chart
USD Weekly Performance from MarketMilk
USD Weekly Performance from MarketMilk

United States Headlines and Economic data

Monday:

Chicago Fed’s national economic index retreats in July from record-high in prior month

Powell set to deliver ‘profoundly consequential’ speech, changing how the Fed views inflation

Tuesday:

US Home prices show signs of recovery, rising 4.3% in June, according to Case-Shiller index

U.S. consumer confidence at six-year low; underscores concerns about economic recovery

Richmond manufacturing index rose to 18 in August vs. 10 in July

New home sales surged to highest level since 2006 in July, but builders could soon face headwinds

Philly Fed Nonmanufacturing Index declines from 23.7 to 17.9 in August

Broad risk sentiment was leaning positive for the session and likely a drag on the Greenback, sparked on this session by news that U.S. and China reaffirmed the Phase 1 trade deal.

Wednesday:

U.S. durable goods orders rose jumped 11.2% in July, vs 4.3% increase expected

Fed’s Esther George sees risks building of double-dip recession

KC Fed’s George: US economy well-positioned ‘to recover at some point’

Broad risk sentiment was once again leaning positive after positive COVID-19 related headlines (Cambridge university aims for autumn trials of coronavirus vaccine after UK funding) and possibly on signs that the pandemic pace is slowing broadly worldwide.

Thursday:

Initial U.S. jobless claims totaled just over 1M for the week ending Aug. 22, down from 1.104M in the previous week.

Second-quarter GDP plunged by worst-ever 31.7% as economy went into lockdown

U.S. pending home sales index rose 5.9% to 122.1 last month

Powell announces new Fed approach to inflation that could keep rates lower for longer – this event pretty much turned out how the marked expected, with Powell confirming the change to inflation targeting. This was the green light for traders to continue to move into risk assets and away from safe havens like the U.S. dollar. 

Friday:

‘The recovery is going to be a slow one,’ Fed’s Mester says

Fed’s Harker says it will take ‘a while’ for jobs market to heal, would be OK with inflation at 2.5%

Improvement in coronavirus mortgage bailout stalls, as more borrowers struggle to make payments

U.S. Personal Income Unexpectedly Rises In July, Spending Continues To Spike

Core PCE increased +0.3% in July

U.S. trade deficit in goods surges 11.7% in July

U.S. Consumer sentiment improves slightly in late August, but still near pandemic low

Chicago Business Barometer Eased to 51.2 in August