Which Way Will The Dollar Go?
By: Danelle
The dollar rebounded against the yen and the euro in Asia today as investors bought back the U.S. dollar following its falls last week. But the recovery could be short-lived. The dollar's direction remains dependent on a near-term policy rate hike by the Federal Reserve, and whether people think the rate hike will happen.
If the US Data due out this week remains fragile in peoples eyes, the chances are that many market participants will likely sell USD holdings. The central bank will also likely keep its low rate policy in place for extra time.
For now, the market is focused on upcoming US economic indicators due in from February such as the manufacturing business index, which is due later today, and of course the ravaged employment report which is due Friday. "There are few investors who are optimitic about the dollar's outlook," said Yuzo Sakai (Tokyo Forex & Ueda Harlow FX manager). "Once they are sure that a Fed Policy rate hike won't come soon, players could rush to sell the dollar."
