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THE TAKEAWAY: The U.S. Dollar Index ended the week slightly higher after positive data encouraged investors, and offshore concerns supported safe-haven bets.
The start of the week saw some large gains in the U.S Dollar as the Chicago Fed printed a National Activity Index for February of 0.44 versus a January result of -0.32. This improvement was again reaffirmed by the Dallas Federal Reserve Bank which reported a Manufacturing Activity Index of 7.4 in March versus a 2.2 print for February and a forecast of 3.2.
The Dollar entered into a period of consolidation after the initial rally, and then finally rose as safe-haven bets started to gain traction as wider risk trends started to weigh on the minds of investors. A CBS interview with the New York Federal Reserve President William Dudley then saw traders seek the Greenback as Dudley provided a reasonably cautious outlook saying that the fiscal drag in the United States of America was at its most intense point.
The Greenback continued to regain some safe-haven status as the S&P fell as U.K. GDP fell 0.3% in the fourth quarter. This sent the Pound sharply lower against its American counterpart sending the U.S. Dollar Index past the 10,475 mark. Traders started to take some money off the table later in the week as catalysts for more gains in the Dollar became less clear, and on Thursday afternoon, the Greenback fell sharply as economists expected a Chicago report of Business Conditions to show 56.5 but were disappointed when the printed number yielded 52.4.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.Learn forex trading with a free practice account and trading charts from FXCM.
Source: Daily fx
