Weekly Focus: USD Outlook Bearish

WikiFX News (3 Aug)- In the following week, USD may keep retreating under the pressure of stock markets and Fed rate decision.

USD may decline if earnings reports from large-cap companies such as HSBC and Disney put a discount on haven-linked assets.

Meanwhile, Fed rate decision is another factor hindering USD from any gains and forcing stock markets higher. The Fed said at the rate decision for July that it would not let go of the gas pedal in regards to quantitative easing. The notion of an uninterrupted market liquidity from the Fed helped further mitigate fears about credit crisis and inspired market sentiment. By doing so, however, it hammered the demands for haven-linked assets such as USD and amplified the gains of cycle-sensitive assets such as stocks.

In addition, a series of PMI data out of key supply chain and consumer-oriented economies will start trickling out this week. If these data is better than expected, there may be the trace for economic stabilization, which booms cycle-sensitive assets higher at the expense of haven-linked assets.

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