Even though at some certain points the U.S. Dollar has been appreciating, the general trend remained bearish, resulting in an average loss of 1.5% relative to its major counterparts within the last five trading days, as demand for riskier currencies appeared to be stronger.
At first the Greenback was pressured last Wednesday amid disappointing data on U.S. retail sales, afterwards, however, a 10-year bond auction showed nonvanishing conviction of market participants in ability of the U.S.A. to overcome existing problems. Consequently, an initial 0.5% loss was almost fully offset.
The next day U.S. economy continued to surprise market with disappointing data, such as contracting CPI and surging unemployment claims, forcing U.S. Dollar currency to lose 0.4% within the day.
The following 24 hours of trading, including late Sunday, proved to be bearish for the Dollar as well (-0.75%). First, UoM consumer sentiment deterioration and launch of extended collateral term repo facility by the BoE, then pro-bailout party’s win in Greek parliamentary elections, extended dip of the Greenback, while market volatility skyrocketed.
On Monday optimistic outlook after the weekend was slowly fading away, allowing the U.S. Dollar to appreciate by 0.4% as a safe haven currency.
Despite worsening economic sentiment in Eurozone and increasing amount of building permits issued in the U.S.A., pressure on the Dollar was renewed on 19th of June, as confidence of market participants in real positive changes after G20 meeting increased.
During the previous week the average correlation coefficient has been steadily advancing, reaching a mark of 0.6 on Friday. This week, however, the coefficient that imitates significance of the currency slid down to 0.4, implying decreased compared with usual attention paid to the Dollar by market participants.
Correlation between USD/EUR and USD/CHF currency pairs continues to be the strongest among the constituents of the average correlation coefficient, due to a cap of EUR/CHF at 1.20, which prevents depreciation of the Euro ahead of the Swiss Franc.
Interrelations USD/EUR & USD/JPY and USD/JPY & USD/CHF, on the other hand, are weak, as their respective correlation coefficients fluctuated near zero during the last five trading days.