This week was relatively quiet in terms of news, though some important macroeconomic reports were released. Meanwhile, the US dollar was rising against other most-traded currencies and the Dollar Index surged to the highest level in almost three years.
As was expected, the dollar managed to rally despite possible obstacles. The major driver of the gains was speculation that the Federal Reserve will end its quantitative easing program. This week’s macroeconomic data was bad for the most part and, truth be told, did not support the outlook for reduced stimulus. Yet this did not prevent talks about QE end to persist.
The euro had its share of problems that pushed it down against the greenback, the major of which were the miserable GDP reports from Germany, France and the whole eurozone. Commodity currencies, including the Australian and Canadian dollar, were particularly weak versus the US dollar. The Aussie was falling for 9 sessions in 10 days.
EUR/USD dropped from 1.2967 to 1.2826, the lowest weekly close since March. GBP/USD sank from 1.5351 to 1.5164, also the weakest weekly closing rate since March. USD/JPY jumped from 101.85 to 103.27 — the highest since October 2008. USD/CAD jumped from 1.0115 to 1.0290, the strongest weekly closing price since July. AUD/CAD tumbled from 0.9999 to 0.9723 — the low not seen since June.