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End Of Month Flows Sends U.S. Dollar Higher

By Kathy LienForexMay 01, 2021 09:10AM ET
www.investing.com/analysis/end-of-month-flows-sends-us-dollar-higher-200576863
End Of Month Flows Sends U.S. Dollar Higher
By Kathy Lien   |  May 01, 2021 09:10AM ET
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Month end flows drove the U.S. dollar higher against all of the major currencies on Friday. The month of April was a challenging one for the greenback. The Dollar Index dropped from 93.30 to 90.50 with virtually no meaningful relief rallies. Despite steady improvements in U.S. data, every week was a losing one. This decline was driven by the Federal Reserve’s insistence that more improvements are needed in inflation and employment before balance sheet changes can be considered. However, as the month drew to a close, investors returned to the greenback because good data cannot be ignored. Personal income, spending and manufacturing activity in the Chicago region were stronger than expected, with the University of Michigan also reporting a larger upward revision in their consumer sentiment index. Improvements like these are expected to continue in the week ahead reminding investors of the U.S. economy’s outperformance. 
 
The contrast between the U.S. recovery and the Eurozone’s was reinforced by today’s first quarter EZ GDP report. Although GDP growth contracted less than expected in Q1 (-0.6% vs. -0.8% forecast), the pandemic drove the Eurozone into a double dip recession. EUR/USD sold off sharply, but the contraction was shallow and brief. The second quarter is already off to a good start with Germany upgrading its GDP forecasts. Germany set a new record with 1 million vaccinations in one day, and by June, France will be allowing anyone over 18 to get a vaccine. As the number of shots in arms increase, the euro area’s recovery will gain traction quickly and when that happens, the euro will regain its luster.
 
Until then, we look forward to another week of strong U.S. data. Faster growth is expected in the service and manufacturing sectors leading to a non-farm payrolls report that could exceed a million jobs. The U.S. dollar rallied on Friday and we expect further demand in the week ahead as traders position for a good number. 
 
The worst performing currencies were the New Zealand dollar and sterling. There were no market-moving reports from New Zealand and the UK but as two of the most sensitive currencies, they lost the greatest value against the dollar. The Australian dollar also sold off, but Canadian dollar ended the day unchanged despite weaker than expected monthly GDP growth.
End Of Month Flows Sends U.S. Dollar Higher
 

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End Of Month Flows Sends U.S. Dollar Higher

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Comments (18)
Sravan Sravan
EatReadLoveTrade May 02, 2021 1:41PM ET
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Don't trust such analysis, people speak either ways.
Victor oladapo
Victor oladapo May 02, 2021 10:28AM ET
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how are you doing
MIchal Brajer
MIchal Brajer May 02, 2021 6:10AM ET
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Absolutely useless article. Every trader can see the chart to determine which currency WAS best performing or worst performing in the past day or week. IMO traders would appreciate the prediction which currency WILL BE best performing or worst performing in the next week and they would appreciate the analysis to justify such a prediction. Every beginner trader could make such a blah-blah-blah "analysis" similiar to Kathy Lien's one..
Adil Khan
Adil Khan May 02, 2021 6:10AM ET
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If you have half a brain cell then you will understand what she means . Her article says dollar will out perform
PIERA MWANIKI
PIERA MWANIKI May 02, 2021 6:10AM ET
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MIchal Brajer
MIchal Brajer May 02, 2021 6:10AM ET
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Adil Khan  Try to check her older articles, when she tries to make a forecast, she's mostly wrong and she could be wrong again, because last weeks USD is driven mostly by risk-on/risk-off sentiment and not by US economic data. Check last US NF Payrolls and market reaction to excellent data (USD sold off). If you need to find quality analysis, you have to look elsewhere, that's my opinion, I really don't care what Mrs. Lien means.
MIchal Brajer
MIchal Brajer May 02, 2021 6:10AM ET
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Adil Khan  So how are you satisfied with Kathy Lien's prediction of further demand for USD?
Abdi Hassan
Abdi Hassan May 02, 2021 1:50AM ET
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..end of mont the stocks of amazon will doninate to the rise of dollar..in percent to overflow the market..
TL Chan
TL Chan May 02, 2021 12:22AM ET
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This article is more consistent not like Fed Wednesday Dovish then Friday analysts hawkish (higher chance of earlier tapering), This stud*p*d analyst made people lose money , making people schizophrenic, slapping people faces ! Starting from European market panic sell off on Thursday then US algo sell off on both Thursday and Friday, no matter how strong the earning results in the week. Retail investor could not react cause they don't know what was happening and be punished for buying strong earning stocks. This is ridiculous !
Siamak Jowkar
Siamak Jowkar May 02, 2021 12:05AM ET
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Thank you, it is a very good economic analysis
palak shah
palak shah May 01, 2021 8:48PM ET
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how to trade in forex? which one is best platform where I can trade with reasonable commission?
paul hirschi
paul hirschi May 01, 2021 8:48PM ET
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where are you located?
Bowaka Robert
Bowaka Robert May 01, 2021 3:38PM ET
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Hello everybody.I am new in this application so i don't know how to use. Anyway for the first time I just wanted to if I can deal with no penny please if I can tell me how. Thank you
Utsav Pathak
Utsav Pathak May 01, 2021 12:32PM ET
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One cant print dollars forever. World knows better than getting into a bear trap. Dollar should be sold on rallies in my view.
Alan West
Alan West May 01, 2021 12:32PM ET
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When interest rates go up dollars will be ‘unprinted’.
Kunal Shaha
Kunal Shaha May 01, 2021 11:42AM ET
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dollar going to fall sharp coming days
Al Mon
Al Mon May 01, 2021 11:24AM ET
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What should i invest on
foon-lung YANG
foon-lung YANG May 01, 2021 11:03AM ET
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Yep correction eur//usd.everybody knows that you are happy when usd is high but on medium term and long term usd iwill be down and you know it .you have only 3 to 4 days to be happy after that you wont be happy again target is 1.28 . And you know that i am sure.
Samuel Abraham
Samuel Abraham May 01, 2021 10:37AM ET
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i just started
Jay Jay
Jay Jay May 01, 2021 10:11AM ET
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Wow.. I lose a lot because of this unexpected burst of usd..
Edward Atencia
Edward Atencia May 01, 2021 10:11AM ET
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bro retracement bro
Oshinosh Oshinosh
Oshinosh Oshinosh May 01, 2021 10:11AM ET
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Thanks for playing
Jay Jay
Jay Jay May 01, 2021 10:10AM ET
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Wow.. I lose a lot because of this unexpected burst of usd..
JONSARD LUKULA
JONSARD LUKULA May 01, 2021 10:08AM ET
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Luis Miguel Lozada Montiel
Luis1983L May 01, 2021 10:08AM ET
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Thank you Kathy, excellent summary.
Stephen Edegwafe
Stephen Edegwafe May 01, 2021 10:08AM ET
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There is no excellent summary there expect dollar to fall because of printing of to much money in us economy resulting to much money chasing to much chasing few goods leading to high cost of goods or commodity and high inflation.What does high cost of commodity signal as it relates to currencies?
Hassan Jani
Hassan Jani May 01, 2021 10:03AM ET
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