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THE TAKEAWAY: After trending downwards at the start of the week, the U.S. Dollar Index recovered losses on positive data to end up largely flat for the week ahead of non-farm payrolls.
The U.S. Dollar experienced losses as the week started, and lost further ground as the Australian Dollar rallied after the Reserve Bank of Australia decided to hold rates at 3.00 per cent. The Dollar had strengthened against the so called “Aussie” in the weeks preceding the announcement as investors anticipated a rate cut. When the Bank held the overnight cash rate, the Australian Dollar saw significant gains against its American counterpart as yield worries abated.
The Greenback then rallied slightly as the ISM’s Anthony Nieves spoke about the slightly better than expected Non Manufacturing Composite print. Nieves reassured investors that the economy was moving along quite well and that companies were gearing up for more volume.
Further positive data was seen as the ADP Employer Services reported that the U.S. had added 198,000 jobs in February. The Dollar resumed a downward trend after the brief rally from the news, as the Bank of Japan left rates and asset purchases unchanged. The Greenback lost more ground mostly against the Euro as the European Central Bank held rates, and the President Mario Draghi said that the economy would stabilize. Finally, the safe asset currency rallied on news that Chinese imports had fallen 15.2% from a year earlier as China reported a trade surplus of $15.25 billion.