Russia » Economics
Author`s name Ольга Савка

Market Pushes the Dollar Higher

The situation is to develop after the Labor Day celebration in the US

The world's major currencies are currently in the narrow range because of August's low liquidity. Some analysts are expecting a certain growth to take place only on September 2nd, after the celebration of the Labor Day in the USA. The recent reconsideration of the information concerning the American GDP can revive the sluggish currency tender, at least to a certain extent. "In the short term, markets are revaluing US growth and that has been driving the dollar higher. Today's US GDP  data will contrast well with the euro zone growth which is nearly zero. We need further good news to push the market toward the new round of reflation trades," said Mansoor Mohi-Uddin, chief currency strategist at UBS.

The US Department for Commerce has repeatedly published the report about the GDP growth in the second quarter. Economists forecast the index revision to 3.0 percent from the previous 2.4 percent. Weekly requirements of the unemployed have been announced too. The forecast was as follows: 390,000 in comparison with previous week's 386,000.

"The dollar stalled in recent days...but the risk of profit-taking seems limited given that we expect to see strong numbers in the US today and tomorrow. The trend of selling of bonds and buying equities remains very firm indeed and that underscores the view this is a dollar positive environment," said Mitul Kotecha, head of global foreign exchange research at Credit Agricole Indosuez.

The yen has been restrained after the warning from Japanese senior diplomat Zembei Mizoguchi against euro's fast moves vs. the yen. "Many foreign players took Mizoguchi's comments on the euro as a hint that Japan has also been buying euros to stop the yen's appreciation," said Junya Tanase, global markets officer at JP Morgan Chase in Tokyo.

The finance ministry has spent approximately nine trillion yens in seven months of the current year to prevent from the destructive export increase of the yen. The ministry was obliged to publish August's intervention data on Friday. Analysts believe, Japan has spent up to two trillion yens to restrain the national currency on a lower level in August after selling 2.0272 trillion yens in July.