Currencies Tumble as Inflation Worries Grow
The simultaneous decline in currencies and Treasury yields confirms our view that investors are growing concerned ab
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The simultaneous decline in currencies and Treasury yields confirms our view that investors are growing concerned ab
The U.S. dollar traded lower against all of the major currencies on Monday despite a good jobs report and a rise in Treasury yields.
Once the dust settled, the dollar ended the day virtually unchanged (slightly lower) from its pre-FOMC levels against other the major currencies. Stocks and bond yields ended higher which should benefit the Yen crosses.
A precise end date for QE will be positive for the dollar, although it could also be calculated by the amount of bond purchases cut per month.
EUR/USD logged its best day in 5 months as US GDP overshadowed the European Central Bank’s monetary policy announcement.
Buckle your seatbelts because the next 24 hours will be a busy one for the foreign exchange market.
Over the past month, USD/CAD has fallen 4.5% as the Canadian dollar soared against the greenback. There have been a string of positive economic reports including the unemployment rate which dropped to its lowest level in 18 months
Three central bank monetary policy announcements, inflation and GDP reports from the U.S. and Eurozone makes for a busy trading week
Stronger than expected earnings drove the Dow Jones Industrial Average to record highs. Despite Delta variant fears, rising prices and supply chain shortage, bulge bracket U.S. companies are thriving. More than 85% of S&P 500 companies that reported as of Tuesday beat expectations in the third quarter. Results like these hardens the case for tapering by the Federal Reserve in November. Normally, the prospect of taper should be positive for the dollar and in many ways, it has for USD/JPY which rose to its strongest level since November 2017. However, that’s where the greenback’s gains end as it traded lower against other major currencies.
Inflation will be on everyone’s minds tomorrow when the U.K. and Canada release consumer price reports. It is no secret that everyone is worried about inflation.
Investors are worried that spending will weaken despite strong earnings in the financial sector. Economists are looking for retail sales to fall -0.2% in September after rising 0.7% the previous month.
Euro hit a year to date low against the U.S. dollar on Tuesday after quietly trending lower for the past 5 weeks. Economic performance and monetary policy direction are the two most important drivers of currency flows and in the case of euro, both have been calling for further weakness.