Fundamental Comment

Dollar looking for more momentum to resume rebound

1020

The U.S. dollar is doing attempts to maintain the undergoing rebound amid escalating trade worries, yet it seems that it lacks enough momentum to rise further.

The dollar index climbed to a peak of 95.67 on Tuesday, but snapped some of the gains to close at 95.35, while it is currently trading around 95.45.

Last week, the green currency escaped its third straight weekly decline after a late recovery that secured a light weekly gain.

The dollar firmed today on elevated trade concerns between, as another of U.S. tariffs on $200-billion worth of Chinese goods could take effect after a public comment period ends on Thursday.

The U.S. and Canada failed to settle their differences regarding the North American Free Trade Agreement, where senior officials from both sides will resume talks in Washington on Wednesday.

As trade concerns rise, investors turn their attention to the dollar as a perceived safe harbor, which helped the dollar to rebound to a two-week high after hitting a four-week low at 94.32 last week.

However, it seems that the momentum is not strong enough to lift the dollar beyond 95.50, especially as it failed to close above this level the previous session.

The euro pared some of its losses when it hit a low of $1.1542 to hover around $1.1572 after a report showing euro area Composite PMI grew more than forecast in August.

The pound continued to trade lower for a fifth straight session at $1.2802, despite the improvement in service PMI, amidst uncertainty whether the U.K. and the EU would reach an accord concerning Britain’s departure from the EU.

Eyes will focus on U.S. non-farm payroll figures on Friday, as upbeat data would raise forecasts for a September rate hike by the Federal Reserve.

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