The dollar index rose for the first time in four weeks | IFCM UAE
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The dollar index rose for the first time in four weeks

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    2023/02/27
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Last week, the US dollar index rose for the first time after the 3-week continuous decline. There was no single trend on the US stock market. The Dow Jones Industrial Index rose by 1.2%, S&P 500 – by 0.2%, and Nasdaq fell by 0.4%. Such multi-directional dynamics were contributed by the corporate reports for Q2 of this year. The dynamics of the traditional economy companies included in the Dow index, turned out to be better. This contributed to its growth for 8 consecutive days, and each time the Dow updated its historic high. Based on the data of all the reported US companies, investors now expect the growth of the total profit of the companies from the S&P 500 list by 11.8%. At the same time, the net profit in Q3 may grow by another 9.2%.

The beginning of last week was not very successful for the US currency. Market participants negatively perceived the resignation of the White House Communications Director Anthony Scaramucci. In their opinion, the personnel reshuffle in President Donald Trump's office increases political risks. In general, the disagreement factor between Republicans and Democrats in the United States continues to influence the dollar dynamics. Its index updated the 2.5-year-low on Wednesday, August 2 amid a statement by the St. Louis Fed president James Bullard that the Fed should not rush to hike the rate, as this could cause an increase in inflation. After that, according to FedWatch futures, the probability of the Fed rate hike in December of this year fell to 46%. Later, the dollar exchange rate stabilized in anticipation of important data on the US labor market for July. Alongside with inflation, the unemployment rate is the second important factor that draws the Fed attention to decide whether to hike the rate. The third factor is the economic growth. On Friday, the July data on the US labor market were published. They were very positive. The number of Nonfarm payrolls amounted to 209 thousand. This is much more than the forecast of 180 thousand. The June indicator was revised upwards to 231 thousand from 222 thousand. The average hourly wage rose by 0.3% compared with June, which is the biggest increase in 5 months. In annual terms, its growth was 2.5% and exceeded the inflation of 1.6% in July year-on-year. The US unemployment in July fell to a 16-year low and amounted to 4.3%. The dollar index reacted to this information in the most positive way and on Friday it demonstrated the highest daily growth this year.

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