Dollar Finishes Nearly Unchanged Following Volatile Trade
The U.S. Dollar finished nearly unchanged in a volatile trade, highlighted by a choppy two-side market. Late last night, the Dollar was down sharply against most major currencies on end-of-the-year position squaring. Throughout the night, however, a support base was built as traders awaited this morning’s U.S. Initial Claims Report. The Dollar surged to the upside following the release of the better than expected claims report. Traders reacted positively to the good news as it indicated the economy was still on track for a recovery, and the Fed would have to consider hiking interest rates sooner rather than later.
Next week the Dollar faces potentially volatile conditions as the bigger players return to work after an almost two week absence. Trading could get wicked as traders position themselves ahead of the U.S. Non-Farm Payrolls Report on January 8th.
This report is likely to set the tone for the Dollar for several months. Last month’s report showed a surprising drop in the unemployment rate from 10.2% to 10.0%. Traders will be watching the next report to see if the last report was an aberration or the start of a trend. The direction of the Dollar for several months will be decided by this report. A better than expected number should put the pressure on the Fed to begin raising interest rates before the start of the third quarter. A bearish report will mean the Fed will wait until after June.
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