Dollar Weekly Overview 26 FEB - 02 MAR

Yes, believe it or not, the dollar was able to end in green territory last week. The dollar index (USDX) closed at 89.88 on Friday, up 0.16 percent, weighing on a vast majority of commodities.

Indeed. Gold and oil prices faced increasing pressure as the greenback recovered against major competitors. Dollar-denominated commodities tend to react negatively to a rising base currency.

A stronger dollar makes these assets more expensive and therefore, it threatens their physical demand, especially when talking about holders of foreign currencies.

The USDX, which measures the greenback against six major rivals, was trading 0.31 percent lower at 88.23 by the time of this writing.

Last week, we observed a volatile dollar start with a moderate recovery and extend losses afterwards, despite positive economic data improving market sentiment.

Market players began to trust again on the American power as the main event of the week got closer. The Federal Open Market Committee released minutes from its latest monetary policy encounter, in which it confirms its willingness to move forward with further rate hikes in 2018.

Earlier this month, Federal Reserve policymakers decided to leave its benchmark interest rate unchanged in a range between 1.25 and 1.50 percent, while reassuring its commitment to increase interest rates at least three times during this year.

Ahead this week, investors will be looking ahead to a series of macroeconomic events, including the releases of new home sales, goods trade orders, a revision on the fourth-quarter gross domestic product, manufacturing activity AND most importantly, fresh labor market data.

The US Labor Department will unveil its latest report on unemployment, nonfarm payrolls and the evolution of average salaries. Those reports will certainly play a huge role for the dollar.

Also, Federal Reserve Chair Jerome Powell will testify before Congress on Tuesday, another event that could offer more clarity on monetary policy and therefore impact on the greenaback.

FortFS