The US dollar advanced this week, reaching a 17-month high against the euro, as concerns about the debt crisis in Europe persisted, while the economy of the United States continued to recover.
The US currency was actually falling at the beginning of this week as risk appetite damped demand for safety of the dollar. Growth of manufacturing in the USA and China made traders more optimistic, while the minutes of the Federal Reserve policy meeting undermined the greenback, hinting at a new round of so-called quantitative easing.
The optimism hasn’t lasted long, though, and risk aversion again kicked in. Europe, as one can expect, was a reason for the negative sentiment. There wasn’t anything specifically new, just more signs that the European banking system is failing and the sovereign-debt crisis worsening.
The American economy, on the contrary, was looking good, especially the labor market with high employment growth. Next week is also expect to demonstrate positive developments in the USA, including rising retail sales, improving consumer sentiment and falling unemployment claims.
EUR/USD fell from 1.2929 to 1.2718 this week, following the advance to 1.3075. The weekly low was 1.2696 — the lowest price since September 2010. USD/JPY ended the week at the opening level of 76.95. USD/CHF climbed from 0.9405 to 0.9550 after touching the weekly low of 0.9303.
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