Currency traders were relatively neutral trading the U.S dollar at London’s trading session on Monday, despite an impressive U.S Job report that pushed U.S Treasury yields upward.
The U.S dollar index that is used to track the U.S dollar against major global currency pairs, was down 0.02% to trade at 93.406 as at the time this report was drafted.
Non-Farm U.S payroll data showed it gained by 1.763 million in July, as against the estimated 1.6 million increases. Unemployment also fell to 10.2% in July, compared to June’s reading of 10.5%.
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Why currency traders are neutral: In the meantime, doubts over the health of the world’s largest economy remain, with the COVID-19 caseloads surging past five million as of August 10, according to Johns Hopkins University.
Note that this is the longest losing streak recorded by the safe-haven currency in ten years. These have also left a structural gap in the currency market, as well as leaving it fragile to a pullback on any positive news.
Quick fact: The U.S. Dollar Index tracks the American dollar against other major currencies such as the Japanese yen, British pound sterling, Swedish Krona, the Euro, and more. Individuals hoping to meet foreign exchange payment obligations, via dollar transactions to European countries, and Japan, would need to pay more dollars in meeting such obligations.
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Stephen Innes, Chief Global Market Strategist at AxiCorp in a note to Nairametrics explained why the currency market is relatively quiet. He said:
“The forex market has started the week off on a muted note as traders try to decide which directions to move after a decent reduction on “short “dollar risk due to better than expected US jobs data and escalating US-China tensions, which is creating some haven demand for the Greenback.”