This week witnessed a marked weakness for the US dollar against most of its rivals and investors turned to sell the dollar as many policy makers hinted to start a shift from the easing policy towards tightening policy to begin reducing the gap with US Federal Reserve policy. The dollar index has fallen to the lowest levels over 8 months at 95.20. On the other hand, the US economy grew by 1.4% in the first quarter of 2017.
The euro took advantage of the weakness of the US dollar to rise strongly during the week, supported by remarks by Mario Draghi, Governor of the ECB, which hinted at the possibility of starting to ease the stimulus program initiated in 2015, and the ECB came to declare that the markets have misunderstood those remarks, Euro ignored this and continue to rise, with the EURUSD hitting its highest level in a year at 1.1444.
The British Pound took the same course as the EUR and rallied against the US Dollar despite the divergence in the policy-makers' remarks between the fact that it is time to seriously consider raising interest rates from historic lows as inflation rates continue to rise and approaching 3% levels, and leaving its policy as it is. The BOE is approaching to tighten its monetary policy. GBPUSD rose to its highest level in almost a month at 1.3029 which is a strong resistance.
The BOC is also on the way to tightening its monetary policy, as the economy continues to record good data recently and adapting to low oil prices. Speculation about the bank to raise interest rates in July meeting, pushing the Canadian dollar to its highest level since September 2016, USDCAD is breaking a very strong support area at 1.30 and staying below that level we would see it targeting 1.28 / 26.
Oil prices have seen a remarkable recovery since the start of trading this week in light of the optimism of oil producers to return the balance of markets during the last two quarters of this year, the US crude stabilized higher than a strong support area at 43$ levels and is currently testing a strong resistance level at 45.75$ A break above it opens room to further recovery towards the 50$ levels again.