The USD is steadily building further momentum as the markets digest the news that the United States added another 215,000 jobs to its economy during July. This might not be the most exciting number for the USD bulls, but it does add further weight to the opinion that the US economy is performing on a consistent basis and its economic recovery is sustainable. More importantly for investors, the jobs report should provide further inspiration for the Federal Reserve to begin raising interest rates as early as possibly next month, mainly because the US economy is performing with such consistency that there is no reason for the Federal Reserve to not pull the trigger in 2015.
While there are concerns over possible risks to the international economy, I see no reason for the Fed to use this as a reason to swerve away from their repeated commitment to begin raising interest rates this year, and I actually strongly feel that the central bank sticking to their pledge would provide confidence in the global economy with a much-needed boost. One thing I am keeping a very close eye on and I have mentioned it before, is that this divergence in both economic and monetary sentiment is returning to the currency markets once again, and this will be supportive towards the USD. The bottom line is that the Federal Reserve will be raising interest rates before the overwhelming majority of central banks can even contemplate the idea of mentioning it, and I also think anyone who is seriously expecting the Bank of England (BoE) to raise interest rates within the next six months is being very ambitious.
One thing to keep an eye on is Gold, because the metal has entered a new period of weakness. The stunning move between the psychological level of $1100 can’t be understated and the bulls have failed when attempting to push it back above this previous critical support zone. Now that Gold is trading below $1100, it has opened the doors towards an eventual move below $1000 and I personally think it can trade below this by the beginning of the next quarter.
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