iFOREX Daily Analysis : October 07, 2015

 | Oct 07, 2015 04:45AM ET

The dollar extended losses against the other major currencies on Tuesday, as dampened expectations for a U.S. rate hike before the end of the year continued to weigh on the greenback.

Furthermore, official data released on Tuesday showed that the U.S. trade deficit widened by the most in five months in August reaching $48.33 billion from $41.81 billion in July, as exports dropped falling 2% to the lowest level since October 2012, while imports rose 1.2%.

Today financial markets in China will be closed for holidays. The Bank of Japan announced its benchmark interest rate and published its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision. During the day the Swiss National Bank is to produce data on foreign currency reserves, the U.K. is to publish data on industrial production, and Canada is to report on building permits.

But investors’ focus will be mainly on Thursday U.S weekly report on initial jobless claims and on ECB and Fed publications of the minutes of their September meetings.

EUR/USD

The euro pushed higher against the weaker dollar on Tuesday, even if German factory orders declined by 1.8% in August, confounding expectations for a 0.5% gain.

EUR/USD surged more than 0.75%, amid downbeat forecasts from the International Monetary Fund on global economic growth over the next year and a widening of the U.S. trade deficit in August.

Citing weakness in China and soft commodity prices, the IMF estimated that the world's economy will grow at 3.1% this year and 3.6% in 2016; both estimates are 0.2% below the IMF's July forecasts.

The greenback remained on the back foot after Friday’s unexpectedly weak U.S. jobs report prompted investors to abandon expectations for a rate hike by the Fed before the end of 2015.

Now investors are waiting for Thursday ECB and Fed publications of the minutes of their most recent meetings.