07.10.2021 11:07 AM
US dollar still on a roll

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By the end of the current week, the US currency is still on a roll. Greenback rises steadily on inflation fears. Positive statistical data in the USA is an additional boost for the dollar.

The US dollar hit a 1-year high on Wednesday, against the backdrop of soaring energy prices, inflation worries, and interest rate hikes. As a result, investors' appetite for risk has decreased. According to analysts, an increase in inflation is hampering economic growth and putting pressure on the Fed to raise interest rates. The Federal Reserve said on Wednesday it would likely begin reducing its monthly bond purchases as soon as November and had signaled interest rate increases may follow more quickly than expected.

Strong US labour market data support the USD as it helps the Fed to stabilize monetary policy. However, this controversial information most often prevents the stock market from rising. In the short-term planning, strong statistics from the USA support the rise in yields but slow down shares appreciation. At the same time, securities rise in the long term, experts emphasize.

In the current situation, the greenback has benefited from the positive ADP data. A report showed stronger than expected private sector job growth in the month of September. ADP said employment jumped by 568,000 jobs in September. Economists had expected private sector employment to climb by 425,000 jobs. Against this backdrop, the US currency firmed against the Euro. On the morning of Thursday, October 7, EUR/USD was trading at 1.1553.

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The current mood of the EUR/USD is encouragingly bearish. According to estimates by currency strategists at Credit Suisse, the pair's nearest target is seen at 1.1400 level. Credit Suisse said that the previous EUR/USD target of 1.1600 was reached at the end of September. The company stressed that in the current situation, the extended target at 1,1400 should be maintained.

At the moment, market participants' attention is focused on Friday's nonfarm payrolls. Investors and analysts expect them to show a lasting improvement in the labour market. The report will be released on Friday, October 8. According to expectations, employment will jump by 473,000 jobs in September. Experts believe this will help the greenback to grow further.

Larisa Kolesnikova,
Analytical expert of InstaForex
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