Sunday, December 13, 2015, Agrahayan 29, 1422 BS, Safar 30, 1437 Hijri

Weekly Forex Market Analysis
Dollar stronger as investors expect rate hike next week
Faruk Ahmed
Published :Sunday, 13 December, 2015,  Time : 12:00 AM  View Count : 22

Crowded dollar longs are under a bit of pressure last week due to traders guessing on whether the Fed will raise interest rates in December. However, it closed stronger major rivals Friday after as data showed that US retail sales rose slightly less-than-expected in November, ahead of the Federal Reserve meeting due next week.
One currency that could see some short-term strength against the greenback is the Australian dollar. After consolidating within a symmetrical triangle for the past several weeks, AUD/USD is peeking out above its upper trend line. The Australian dollar climbed to 0.7289 dollar against the dollar Friday.
Bangladesh taka, however, was kept stable at its earlier level against the dollar to encourage exporters and remittance earners. The dollar traded at Tk 78.22 and Tk 78.27 per unit in line with its previous week's closings.
Meanwhile, the euro dropped to 1.0936 dollars, the British pound  to 1.5159 dollars, Japanese yen to 121.62, Swiss franc to 0.9891, Canadian dollar fell to 1.3618, according to Reuters.
The dollar index, which measures the greenback against six major peers, was up 0.62 per cent at 97.948 Friday, compared to nearly 8.00 per cent rise in 2015. Most investors held that the US central bank would announce decisions to lift interest rates in its December meeting for the first time in almost a decade next week. Data from the US Commerce Department showed that retail sales rose by 0.2 per cent in November after inching up by 0.1 per cent in October. Economists had expected sales to increase by about 0.3 per cent.
But the value of the dollar's net long position slipped to $41.22 billion in the week ended Dec. 8, from $43.47 billion the previous week, according to Reuters data. Speculators have trimmed their net long position on the dollar for a second straight week. The decline was expected especially in the wake of the European Central Bank's stimulus package announced last week that came in below market expectations.
The ECB decision had resulted in a big jump in the euro, rising as much as 3.0 per cent last week, while it was down more than 9.0 per cent against the dollar in 2015.  Many in the market had predicted that the euro will slide to parity against the dollar because of the divergence in monetary policy between the Fed and the ECB. However, parity between the euro and the dollar has yet to happen.

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