The USD rose against most major currencies last week as central banks took synchronized moves to cut interest rates in a bid to prop up weakening economies.
The European Central Bank (ECB) cut its key interest rate to a record low of 0.75 from 1% Thursday to stimulate the economy. The central bank also lowered its deposit rate.
The Bank of England decided to enlarge the size of its Quantitative Easing program by GBP'50-B (US$77-B) to GBP375-B (US$580-B), in an effort to boost the weak economy, as widely expected.
The Chinese central bank also lowered its one year deposit rate the same day by 25 basis points and its one-year lending rates by 31 basis points.
The moves, which sent down the EUR and the GBP helped the USD index climb nearly 2% to 83.226 last week.
The rise of the USD was limited by the expectations that the US Federal Reserve would launch further easing monetary policies during its upcoming meeting at the end of July.
In June the US Fed extended Operation Twist to the end of this year, without implementing the 3rd round of the Quantitative Easing program, or QE-3, as most investors had expected.
The newly-released statistics for June signal that the US economy is in need of more aggressive monetary policies, as the US Labor Department reported that the US economy added 80,000 jobs in June, lower than the previous expectation of 100,000 increases, while the unemployment rate stayed at 8.2%, reflecting continued slow growth in the economy.
The Institute for Supply Management's manufacturing index fell to 49.7 in June from 53.5 in May. It is the 1st time the figure has dropped below 50 since July 2009.
The US Commerce Department reported that factory orders rose 0.7% in May, beating previous estimated increase of 0.2%.
Other data also painted a grim outlook for the US economy, with the services sector expanding at its slowest pace in 2.5 yrs in June and retailers reporting sales below expectations.
Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.