US dollar retreats further and erases all gains

The US dollar started the week higher after comments from Stanly Fisher, who signaled that a rate hike was likely this year but the currency failed to sustain gains and is about to end the day flat, around Friday’s closing price.

The US Dollar index, which gauges the US dollar against its main competitors, opened with a bullish gap at 94.65 and peaked on Asian hours at 94.88. Then it turned to the downside, it filled the gap and bottomed at 94.36. It was about to end the day at 94.40, marginally higher compared to Friday’s closing levels.

Among the most traded currencies, the Canadian dollar was the worst while in Europe the pound outperformed.

Stocks in the US were falling modestly (Dow Jones -0.15%) while commodities were also in negative territory. Crude oil was losing more than 3% while gold was down less than 1% with the ounce below $1340 about to post the lowest close in a week.

In a week with no big economic numbers to be release, traders await Janet Yellen speech from Jackson Hole. Analysts from The Bank of Tokyo-Mitsubishi UFJ said that the main focus this week for the FX market will be Yellen’s speech which could offer more guidance over the likely timing of the next rate hike. “However, it is more likely that the current cautious Fed will refrain from explicitly signalling at which meeting it plans to next raise rates.”