USD Bounces Back, S&P Erases 2015 Loses

The dollar bounced back somewhat Friday as dovish signals from the European Central Bank and the rate cut by the People’s Bank of China lifted the US currency and rescuing it before it sank to its lowest price range.

The futures market saw short-term speculators moving away from the dollar as disappointment with the Federal Reserve’s seeming inability to move away from the zero-bound six years into an economic recovery continued to disappoint.

The unexpected rate cut in China also added to the positive tone for U.S. stocks, which ended the week with gains that left the S&P 500 (SPY) in positive territory for the year and above its 200-day moving average for the first time since Aug. 19…

A tech share rally drove U.S. stocks up sharply for a second day on Friday as earnings from companies including Microsoft beat analysts’ expectations, while healthcare shares rebounded from recent losses.

USD Moved Sideways

The U.S. dollar has been moving sideways after rallying earlier this year. Futures analysts believe that all negative factors have been corrected of late and see the dollar as being in its best position to appreciate in several months. With the significant gains last Thursday and Friday some consolidation should still be expected ahead of the BOJ and FOMC meetings scheduled to take place this week.

Meanwhile, the euro is still suffering hard times while the Japanese yen has moved from the top end of its range to the bottom end.

The dollar bottomed against the yen on October 15 near JPY 118.00, advancing 3.5 yen, while the US 10-year Treasury yield rose 12 bp, and the S&P 500 gained 4%.

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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