US Dollar Holds Ground Ahead Of Employment Figures
The US dollar remains stable and is still going strong amongst other currencies, however, it has held a better position.
It is not currently in its highest position as it was a few months back, yet it is doing better than many currencies.
The Determinants of the US Dollar
There are primarily three factors that have determined the performance of the US Dollar and driven it recently.
Out of these three factors, the most recent is the testimony of Jerome Powell, who is the chairman of the Federal Reserve.
All eyes have been on his statement since the US being the world’s largest economy is somewhat a determinant of economic stability for others.
What follows next in the list of determinants is the release of inflation data along with the job data. These two factors also play a very important role in determining the rate of the US dollar in an open market.
These are the economic indicators that have a significant impact on the rate of the US dollar.
Inflation as a Determinant of the US Dollar
Inflation determines the selling and purchasing power of goods and services in an economy and therefore, is an important determinant.
If inflation is stable that means the economy is stable and therefore, the value of a dollar will go up.
The value of the dollar going up means that other world economies have trust in the dollar and would want to invest in the currency.
The higher the demand for the US dollar, the better rate it will sell at which is a winning situation for the US.
Job Market as a Determinant of the Value of the US Dollar
Strong job data is another factor to determine the economic growth of a country. If there is lower unemployment and higher employment that means the job market is doing well.
If an economy is doing well then it will send a positive message to the investors who want to invest. More investments mean the creation of jobs which will further boost the job market.
A higher employment rate will send a positive signal to investors that the US is doing well, hence people would want to invest in that currency.
This means positive job data will have a major impact on the value of the US dollar and will strengthen it further.
US Dollar against Other Currencies
The US Dollar is known as the world currency, with almost all countries across the globe aiming to reserve foreign currency.
Therefore, any fluctuation in this currency leads to fluctuation in other currencies concurrently.
The dollar has been doing well against other currencies and has remained stable. The US dollar is exchanging at $1.054 against the dollar.
The lowest exchange rate this year has been $1.0482 which doesn’t make that big of a difference.
The US dollar to Yen exchange rate is 137.28 yen which shows a 0.09% increase from the highest exchange rate.
The highest that dollar has been against the yen since last year December is 137.90 Yen.
Pound Sterling gained 0.09% against the US dollar with it not exchanging at $1.1840. The dollar had earlier fallen to $1.1805 and this has been the lowest it’s been since last year, November, against the pound.
The Australian dollar rose by 0.07% with it now exchanging at $0.6588, which is greater than $0.6568. $0.6568 is the lowest since November that the Australian dollar has exchanged at against the US Dollar.
Canadian Dollar against the US Dollar
With the Bank of Canada putting its overnight rate on pause at 4.50%, the Canadian Loonie saw a decrease.
The Canadian bank was the first major financial institution that suspended its monetary tightening operation.
It had done so at a time when there were high expectations that central banks would take steps to ease out the high inflation.
The US Dollar picked pace against the Canadian Dollar by going up 0.34%. The exchange rate between the two dollars now stands at US$1.3799.
The stable position of the US dollar in the market in expectation of the job data is a positive sign for the US economy.
Traders and investors alike eagerly wait for the employment figures while keeping a close eye on the world currency.