USD Pulls Higher, Shakes Off NFP News
The USD rout has halted as the greenback stabilizes, pulling higher against exotic pairs. Generally, the currency is paring losses versus the majors coming as traders digest Friday's NFP news. Last week's economic data revealed fewer jobs were created in the economy than expected, effectively pulling the ladder off the USD. As a result, investors appear to be questioning whether the USD has the momentum to push higher. Still, a lot depends on how Joe Biden handles the coronavirus pandemic.
FED President Bullard expects the U.S. economy, in coming quarters, to bounce strongly off the Coronavirus slow-down. With the USD stabilizing and posting small gains against some majors and most exotic pairs, there appear to be fewer USD bets as traders unwind their positions. By the first week of February, the net bearish bets on the USD had contracted to $29.95 billion from $33.81 billion, U.S. Commodity Futures Trading Commission (CFTC) data show. However, how the economy performs depends on the approval of the stimulus package. Additionally, investors are watching the distribution and administration of the coronavirus vaccine.
Impact on the USD:
Bullish. Net USD bearish positions are declining, and the government is efficiently distributing COVID-19 vaccines, a net positive for the greenback. Suppose the relief package is passed in March as House of Representatives Speaker Nancy Pelosi says, the U.S. economy could recover even faster.
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