The US Dollar Heading for the Skies

The US dollar currently trading higher by a 0.1% from its April 2009 high following terrific job and manufacturing data this week in the US. According to Bloomberg  analysts this will strengthen the case for Federal Reserve to raise interest rates in 2015.

In Australia, the currency has been swinging between gains and loses following higher than forecast retail sales, and its unemployment down to its lowest since 2002 following revised data. Gains in the Japanese Yen compared to its 16 major currencies have been spectacular. Ahead of the European Central Bank policy meeting coming up on Thursday this week, the Euro is at a two-year low.

Given the strength of the US dollar, one expects to continue to see increased investments in the dollar until the economic fundamentals changes. This might be strengthen further by higher employment data expected this week in the US

In South Africa we saw a pullback in the rand yesterday following release of data from China- indicating that demand for exports from the world’s second biggest economy. This also happened against a strong US data. The weakness in the rand should continue given an anticipated weakness in electricity generation and consumption data expected on Thursday this week.  The power generator Eskom has already started implementing power cuts across various cities to deal with the short supply.

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