By Peter Nurse
Investing.com – The U.S. dollar edged lower in early European trade Wednesday, with the focus mainly on the falling Japanese yen after the Bank of Japan maintained its accommodative stance, bucking expectations for a hawkish policy shift.
At 03:05 ET (08:05 GMT), the , which tracks the greenback against a basket of six other currencies, traded 0.1% lower to 102.005, just above the seven-month low of 101.77 seen earlier in the week.
However, the day’s spotlight is on the Japanese yen, with soaring 1.6% to 130.19 after the maintained its short-term policy interest rate at negative 0.1%, and kept its long-term interest rate at 0%, as widely expected.
The BOJ also said it will maintain the range of fluctuation in bond yields at between 0.5% and negative 0.5%, confounding expectations for a further adjustment in the rate, after the central bank unexpectedly widened the range in December.
The yen has rallied 14% in the past three months on expectations that the Bank of Japan will eventually move away from its super-easy stimulus policy, especially as starts to rise significantly.
Today’s decision has reversed some of those gains, but most analysts think another adjustment to its yield curve control policy is just a matter of time and may come in April when there is a scheduled change of leadership at the central bank.
Expectations of further appreciation in the yen in January were the highest in 16 years, according to a survey of global fund managers by Bank of America Securities, released on Tuesday.
Elsewhere, rose 0.3% to 1.2321 after data released earlier Wednesday showed U.K. inflation stayed stuck at over 10% in December, pointing to more interest rate hikes ahead from the .
The Office for National Statistics said the rose 0.4% on the month, bringing the down to 10.5% from 10.7%, in line with economists’ expectations.
rose 0.5% to 1.0838, with the euro boosted after German Chancellor Olaf Scholz said at the World Economic Forum in Davos that he was convinced Europe’s largest economy would not fall into a recession.
The final release of the December number is due later in the session and is expected to be confirmed at an annual 9.2% growth, a sharp drop from 10.1% the prior month.
rose 0.5% to 0.7018, while traded largely unchanged at 6.7744, with the yuan coming off a near five-month high after the weak Chinese growth data earlier in the week.
Dollar stabilizes near five-week high ahead of more debt ceiling talks
Investing.com – The U.S. dollar stabilized in early European trade Tuesday, just off a five-week high helped by its safe haven status as the standoff in Washington over the U.S. debt ceiling continued.
At 03:15 ET (07:15 GMT), the , which tracks the greenback against a basket of six other currencies, traded largely flat at 102.250.
The potential for a U.S. default of its debts if a deal is not done to lift the country’s borrowing limit, which Treasury Secretary Janet Yellen reiterated could be hit as soon as June 1, has helped the dollar push higher of late, with traders seeking the greenback given it is often used as a safe haven in times of stress.
The main parties are expected to meet once more later Tuesday, with President Joe Biden expressing confidence a deal can be done, but Republican House of Representatives Speaker Kevin McCarthy said on Monday that the two sides were still far apart.
“Unless we see truly encouraging progress, investors’ fears may keep growing,” said analysts at ING, in a note. “Barring positive news on this end, we think the balance of risks remains tilted to the upside for the dollar for now, which should see safe-haven flows as risk sentiment stays subdued.”
Aside from this, traders are likely to focus on the release of U.S. data for April, which is expected to show sales grew 0.8% on the month in April, an improvement from the dramatic slump of 0.6% last month.
The raised interest rates last week for a 10th straight time, but hinted that it may be about to pause its aggressive policy tightening as it studies incoming economic data and assesses the impact of the tightening to date.
Inflation remained elevated in April, even if slightly lower than the prior month, and a number of Fed officials have said in separate addresses that interest rates were likely to stay higher for longer if prices continue to remain substantially above the Fed’s 2% target.
Elsewhere, rose 0.1% to 1.0880, after bouncing off a five-week low overnight, ahead of the release of preliminary first quarter for the euro zone.
This is expected to show the region barely scraped growth in the first three months of the year, rising 0.1% on the quarter and 1.3% on an annual basis.
Also of interest will be the for May, which is expected to show a deterioration of sentiment in the eurozone’s largest economy.
fell 0.3% to 1.2494 after the U.K. unexpectedly rose to 3.9% in the three months to March, raising the likelihood of the Bank of England pausing its run of increases when it next meets in June.
dropped 0.3% to 135.78, fell 0.3% to 0.6683, while rose 0.2% to 6.9643 with the yuan trading near a two-month low after Chinese data showed and grew less than expected in April.
rose 0.1% to 19.6861 as Turkey’s presidential race heads to a runoff with incumbent Tayyip Erdogan leading his opposition rival.
The Virk brothers earned their engineering degrees at one of India’s premier engineering institutes – Punjab Engineering College – before pursuing their MBAs in the United States. Sarvjeet specialised in business management and marketing, while Tajinder focused on finance. Both brothers embarked on impressive careers right out of college, with Sarvjeet starting his first business at the age of 25 and Tajinder becoming the Vice President of Global Equity Trading at Fortis (NYSE:FTS) Bank at the same young age.
In 2009, the brothers founded Finvasia as a Foreign Institutional Investor (FII) in India. Setting out as money managers for prominent hedge funds and institutional investors, they were struck by the flaws of the financial industry in India.
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From thought to action there is only one step
Spanning several countries and industries, including technology, healthcare, and real estate, Finvasia marks a new era of engineering-driven, conflict-free and ethical businesses that shape the industry they operate in. Embarking on a multidisciplinary journey, Sarvjeet and Tajinder Virk worked towards creating an umbrella group servicing multiple verticals.
Finvasia’s diverse portfolio of brands creates an accessible, cost-effective, and integrated ecosystem that challenges industry norms and devises innovative solutions to real-world problems. Key brands within the Finvasia ecosystem include Shoonya, India’s first “Zero Cost” financial ecosystem; ZuluTrade, the world’s largest broker-agnostic social trading platform; Fxview, a globally recognised forex and OTC broker; and ActTrader, a leading fintech platform providing traders with access to a range of financial instruments.
The multidisciplinary group, along with its subsidiaries, has served a client base exceeding 5 million individuals across 190 countries, and has hosted several millions of accounts transacting trillions of dollars worth of transaction value.
The company employs over 450 employees across its offices in Australia, Japan, India, Mauritius, Cyprus, Greece, UK, South Africa, Canada, and the USA. What’s more interesting is that the Group has been EBIT positive all these years, showcasing its strong financial foundation and sustainable growth.
In 2023, Finvasia obtained an investment banking license and plans to launch a Global EMI and a neo-bank in India soon. This expansion demonstrates the company’s commitment to offering innovative financial solutions to its growing customer base.
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The inspiring journey of the Virk brothers, who transformed Finvasia into a global enterprise, demonstrates the power of vision, innovation, and tenacity. Their unwavering dedication to creating ethical, sustainable products that benefit stakeholders has set new benchmarks for excellence, paving the way for a brighter, more inclusive future.
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Asia FX dips on weak Chinese data, hawkish Fed comments
Investing.com — Most Asian currencies retreated on Tuesday as disappointing Chinese economic data posited a weak outlook for the region’s largest economy, while hawkish comments from Federal Reserve officials also brewed uncertainty over the path of U.S. interest rates.
fell 0.1% and traded near a two-month low after data showed and grew less than expected in April. The readings, which come on the heels of several weak economic indicators earlier this month, point to a staggered recovery in Asia’s largest economy, even after the country relaxed most anti-COVID measures earlier this year.
The weak data also saw markets positioning for a potential 25 basis point rate cut by the People’s Bank next month, which is likely to fuel further weakness in the yuan. The currency was trading just shy of the psychologically important 7 level against the dollar.
Weakness in China spilled over into other Asian currency markets, particularly those with a high trade exposure to the country. The fell 0.1%, while the led losses across Southeast Asia with a 0.3% dip, as traders also locked in recent profits in the currency.
The fell 0.1%, also coming under pressure from a sharp drop in in the face of rising interest rates and worsening economic conditions.
Sentiment towards risk-driven assets was also rattled by a slew of Federal Reserve officials warning that the bank could still act further to bring down stubborn inflation. said in separate addresses that interest rates were likely to stay higher for longer, with some officials also raising the possibility of more interest rate hikes.
The and steadied near a one-month high on Tuesday, after logging small losses in the prior session. But the greenback still strengthened against the by about 0.1%.
The dollar moved little this week as markets hunkered down in anticipation of more U.S. economic signals this week, starting with and due later in the day.
Several more Fed speakers are also lined up for the week, most notably on Friday.
show that markets are still positioning for a pause in the Fed’s rate hike cycle in June. But traders are also factoring in a small chance of a 25 basis point hike.
The prospect of U.S. rates remaining higher for longer bodes poorly for Asian currencies, as the gap between risky and low-risk yields narrows.
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