U.S. Dollar Gains Momentum After a Positive Jobs Report

U.S. Dollar

The U.S. dollar has gained momentum after a gain of streaks, including a recent rise in U.S. bond yields after a positive Jobs Report from June. A website called Independent Online stated the U.S. dollar is at its strongest run since last October. The U.S. dollar has been gaining for five straight days, with reports that it may remain there at least until the following week.

Vasileios Gkionakis, the global head of FX Strategy for a bank called UniCredit in London was reported as saying rates will most likely grow higher for the U.S. dollar versus for the yen and the euro, especially with the euro dropping a bit after reports of “weak manufacturing data” surfaced from Germany.

Independent Online also reported MSCI Inc. showed record high shares in their All World Index as the U.S. outperformed dim forecasts over job growth, and reached new heights with Wall Street. Analysts expect earnings growth of at least 6.2 percent for the second quarter of 2014, with double-digits expected for the third and fourth quarter. These upcoming figures may be possible if the Federal Reserve continues to keep interest rates at an all-time low, no matter if the Federal Reserve also cuts back on its bond-buying stimulus plan, Independent Online stated. The dollar index was at 80.300 which is up from 79.740 from last Tuesday.

The U.S. dollar has gained momentum after a positive Jobs Report and outlook for the first half of 2014, but CNBC News reported investors have alternating views on gains if the Federal Reserve increases interest rates, particularly due to the current jobs report. CNBC noted traders are hesitant about “adding to long dollar bets,” but stated that most think the Federal Reserve will “err on the side of caution.”

Minutes from the Federal Reserve’s rate-setting committee is due out later this week, and that would allow traders to see which direction the U.S. dollar may head. According to the CNBC’s report, “most traders” are waiting for two-year Treasury bonds to yield higher results as it is a good indicator on how much the dollar will rise too.

Other news concerning the U.S. dollar took place between French bank, BNP Paribas, and the U.S. government, according to a report by Joseph Ax, Aruna Viswanatha, and Maya Nikolaeva of Reuters. The three reporters stated BNP  had pleaded guilty for violating U.S. sanctions set against Iran, Sudan and Cuba. BNP must now pay about $9 billion in fines, and will be banned for one year from “conducting certain U.S. dollar transactions.”

According to the report from Reuters, the New York State Regulator had said BNP attempted to “evade detection” and conceal more than $190 billion in transactions involving clients who were “subject to U.S. sanctions” from 2002 to 2012. U.S. authorities had stated BNP failed to cooperate with law enforcement at initial contact, and had functioned as a central bank for the government of Sudan. Authorities also found the bank assisted “entities” in both Iran and Cuba by stripping away information from wired transfers to avoid “raising red flags.”

French President Francois Hollande shared concerns with U.S. President Barack Obama over the matter, particularly because BNP is one of France’s major global banks. Ax, Viswanatha, and Nikolaeva  noted the charges BNP face “dwarf” other penalties that were previously handled over violations of U.S. sanctions, including that of Credit Suisse CSGN.VX, which faced charges in May over assisting Americans to evade taxes. Though the U.S. dollar is gaining momentum after factors involving a positive Jobs Report and a considerable worldly index mark, it seems the U.S. dollar is also gaining momentum from charges involving violations of U.S. sanctions.

By Liz Pimentel


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