In the third week of September 2017, many observers of the currency markets in general and of the euro-dollar pair, in particular, were struck by the behaviour of the pair, which after equalling its weekly high slipped back into negative territory but then recovered in response a release of macro-data. The data itself seemed to be sending mixed messages but the general interpretation of this data by those who have a professional interest in following these matters was cautiously optimistic. The end result was a gain of 0.2% for the day, a small gain but a gain none the less. In discussing the matter, those observers to whom we have already referred made reference to a Reuters report which cited an anonymous European Central Bank source, who stated that the rest of the year 2017 might see a delay in the hitherto proposed tapering of the Quantitive Easing steps which have been operating. Indeed the report suggested that the tapering might not actually start to occur until December 2017. The Reuters report also mentioned that the on-going strength of the Euro was causing uncertainty to manifest itself on the General Council, with conflicting points of view being expressed by those with differing opinions. This news provoked the slight fall-back in the Euro that marked the beginning of the period which is under discussion in this article. However, the retreat was a small one and the euro had no difficulty in recovering as the mixed data from the US prevented the dollar from being able to perform strongly against its competitors.
Indeed the US dollar index was stagnant during this period and ended the day showing a slight fall. The question occupying the interest of followers of this all-important pair of currencies concerned the possibility of a rate hike. It was generally agreed that without the assurance of an early hike and an assured one to follow at the end of the year, any possible gains for the dollar will not ultimately prove to be sustainable. The good news was that in the political world, the government of the United States chose that time to hint strongly that the last week in September will see tax reform being seriously discussed. It was agreed, at least by more optimistic observers, that the combination of this possible September hike, with more to come would see an end to the decline in the price of the dollar, at least for the time being. Concerns for the performance of the dollar while confidence is uncertain following what is perceived to be erratic behaviour by the still new legislation and also concern over the fate of the euro following the unexpected gains of the far right in the German general election will almost certainly further affect the performance of this major pair of currencies.
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