The Dollar saw an extremely volatile session during last week's trading. The Dollar dropped against the Euro, a drop which sent the EUR/USD pair above the 1.48 level. On the other hand the Dollar also saw a rising trend against the Pound, and the GBP/USD pair dropped below the 1.5815 level.
It seems that the Dollar was largely affected by the positive data which arrived from the U.S economy last week. The Non-Manufacturing Index rose to 50.9 in September, marking the best figure in 16 months. In addition, this was the first time in 12 months that this report delivered a result higher than 50. This means that after 11 months of contracting industry, there are finally signs of expansions. The weekly Unemployment Claims also delivered a relatively positive figure. The report showed that 521,000 individuals filed for unemployment insurance for the first time during the past week, beating expectations for a 543K result. Considering the poor Non-Farm Payrolls figures, an indicator for a stabilizing employment condition in the U.S was much required. However, it appears that the positive data had a negative impact on the Dollar. There are two reasons for that. One, many investors still see the positive signs from the U.S economy as confirmation that the European economies will recover, as they largely depend on U.S consumption. Two, the improving condition of the U.S economy leads some investors to look for higher-yielding assets than the Dollar.
As for the week ahead, as usual, many interesting publications are expected from the U.S economy. Traders are advised to pay attention to the Retails Sales reports on Wednesday, the Consumer Price Indices (CPI) and the Unemployment Claims on Thursday, and the Long-Term Purchases report on Friday. Special attention should be given to the Core CPI report, as a higher-than-expected figure is likely to have a notable impact on the market, with the USD included.