US Dollar Strong During Week, Ends Trading Soft Due to NFP

The US dollar was strong during the past trading week thanks to the outlook for the US tax reform. The currency lost its upward momentum on Friday, though, following the release of nonfarm payrolls.

The greenback started the week opening sharply higher as the US Senate passed its version of the tax reform bill on the weekend. The theme of probable tax cuts dominated the week, supporting the dollar. Yet the currency lost some of its shine on the last trading day of the week after nonfarm payrolls disappointed. Employment growth was solid and above expectations, but wage inflation disappointed market participants even as it accelerated from the previous month.

The Great Britain pound also performed fairly well during the week, supported by hopes for a Brexit deal between Britain and the European Union, though the currency actually weakened following the news that the agreement has been reached. Meanwhile, the Canadian dollar was weighed down by the dovish policy statement from the Bank of Canada. The Reserve Bank of Australia also showed no intentions to start raising interest rates, but that did not hurt the Australian dollar as much as its Canadian counterpart as traders liked the RBA statement more. Perhaps, the Aussie was mainly hurt by the fact that Australia’s economic growth missed expectations.

EUR/USD fell from 1.1861 to 1.1774, and its weekly low of 1.1730. GBP/USD rallied from 112.75 to 113.46, bouncing from the weekly low of 111.98. USD/CAD gained from 1.2700 to 1.2849. AUD/USD dropped from 0.7593 to 0.7508, retreating from the weekly high of 0.7653.

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