Forex News

Dollar retreats from six-week high; data deluge eyed

Published

8 months ago

February 18, 2023

Rohlan

Dollar retreats from six-week high; data deluge eyed

By Peter Nurse

Investing.com – The U.S. dollar edged lower in early European trade Thursday, handing back some of the previous session’s gains after better-than-expected U.S. retail sales pointed to more interest rate hikes by the Federal Reserve.

At 02:00 ET (07:00 GMT), the , which tracks the greenback against a basket of six other currencies, traded 0.2% lower at 103.675, after hitting a near six-week high of 104.11 in the previous session.

U.S. rebounded sharply in January after two straight monthly declines, rising 3.0% on the month compared with December’s 1.1% fall, data showed Wednesday.

This, adding to the stronger than expected U.S. earlier in the week, was seen as largely cementing the case that the still has further to go in tightening rates.

However, they have also illustrated the resilience of the world’s largest economy.

Wall Street closed higher Wednesday as investors appeared to be betting on a relatively soft landing for the U.S. economy, where steady growth and low unemployment exist alongside slowing inflation and higher interest rates.

Goldman Sachs has this week cut its estimate of the chance of a U.S. recession in the next 12 months to 25%, from 35%.

This increased confidence has translated into a weaker dollar in Thursday’s session as traders bought into the lifted risk sentiment.

There are a plethora of U.S. economic data releases due Thursday, including January , , and the .

“We think data will remain the key driver for the dollar and the global risk environment, as the depth of the U.S. economic slowdown is still a key driver of rate expectations, especially when it comes to the timing, size and pace of Fed easing in the medium term,” said ING analysts, in a note.

Elsewhere, rose 0.1% to 1.0700, boosted by President reiterating on Wednesday that the European Central Bank intends to raise borrowing costs by another 50 basis points next month.

rose 0.1% to 1.2034, edging higher after sliding more than 1% in the previous session. This followed data released on Wednesday showing the annual headline rate of slowed more than expected in January, easing the pressure on the to continue its rate-hiking cycle.

fell 0.1% to 133.94, with Kazuo Ueda, the government’s nominee for BOJ governor, set to appear at a confirmation hearing in parliament next week.

The risk-sensitive rose 0.2% to 0.6915, reversing earlier losses after data showed Australia’s unexpectedly shrank in January.

Forex News

Dollar retreats as banking support prompts relief rally

Published

6 months ago

March 28, 2023

Rohlan

Dollar retreats as banking support prompts relief rally

The U.S. dollar slipped lower in early European trade Friday and riskier currencies rallied on easing concerns about a global banking crisis.

At 04:25 ET (08:25 GMT), the , which tracks the greenback against a basket of six other currencies, traded 0.4% lower at 103.715.

The foreign exchange market has seen a relief rally after a number of large U.S. banks injected $30 billion in deposits into First Republic Bank (NYSE:), supporting this regional bank which had been caught up in the backwash of the collapse of two other smaller U.S. banks over the past week.

The move followed Credit Suisse’s (SIX:) announcement earlier on Thursday that it would borrow up to $54B from the Swiss National Bank, ensuring the embattled lender had sufficient liquidity to cope with hefty withdrawals in the wake of a number of banking scandals.

rose 0.5% to 1.0659, benefiting from the decision of the to go ahead on Thursday with its previously signaled 50-basis-point rate hike amidst the banking turmoil.

This suggested the ECB policy makers remain confident in the underlying strength of the Eurozone banking sector.

At her regular press conference, President trod a fine line between acting tough on inflation and acknowledging the need for caution amid growing signs of financial stability risks.

The final data for the Eurozone is due later in the session, and is expected to show that inflation grew 0.8% on the month in February, up 8.5% on the year.

rose 0.5% to 1.2166, soared 0.8% to 0.6708, gained 0.8% to 0.6246, while fell 0.3% to 133.32.

Japan’s government is closely coordinating with the Bank of Japan and financial authorities overseas to prevent fallout from the banking difficulties of a number of Western banks, Finance Minister Shunichi Suzuki said on Friday.

U.S. economic data will center around the release of the University of Michigan’s reading for March later in the session, which will provide a clue as to how Americans are coping with the current economic difficulties.

That said, most eyes have now moved on to next week’s Federal Reserve monetary policy , with expectations rising that the U.S. central bank could slow its aggressive rate-hike campaign in a bid to ease the stress on the financial sector.

Markets are now pricing in a nearly 90% chance that the Fed will hike by a smaller 25 basis points next week.

Forex News

Asia FX rises, dollar dips amid easing bank crisis fears

Published

6 months ago

March 28, 2023

Rohlan

Most Asian currencies rose sharply on Friday amid easing fears of a global banking crisis, while the dollar retreated as markets also bet that the Federal Reserve will soften its hawkish stance to prevent more economic pain.

was among the best performers for the day, rising nearly 0.5% as a positive outlook on the Chinese economy from Goldman Sachs also boosted sentiment. The investment bank expects China’s economy to grow 6% this year, more than government forecasts of 5%.

Economic data released this week showed that certain facets of the economy were recovering from three years of COVID lockdowns. But growth in the manufacturing sector still remained below full capacity.

The rose 0.6% and was set to add 1.4% this week, having benefited greatly from increased safe haven demand. A mild improvement in Japan’s massive also helped sentiment towards the yen, amid easing supply chain issues.

Broader Asian currencies advanced amid increased risk appetite, as fears of an imminent banking collapse were eased by several major U.S. lenders supporting First Republic Bank (NYSE:). This came after Swiss lender Credit Suisse Group AG (SIX:) scored an up to $54 billion credit facility from the Swiss National Bank to fortify liquidity levels.

The support for banks, coupled with government reassurances that the banking sector was stable, helped ease concerns over an imminent collapse in the banking system, following the failure of several U.S. banks over the past week.

The and dollar index futures retreated about 0.3% each amid bets that the Fed will taper its hawkish stance to prevent further pressure on the economy from rising interest rates.

The collapse of several U.S. banks in recent weeks was driven largely by a slump in bond prices, to which lenders such as Silicon Valley Bank were disproportionately exposed.

Markets are now pricing in a nearly 90% chance that the Fed will hike by a smaller 25 basis points next week.

Risk-heavy Southeast Asian currencies advanced on Friday, with the rising 0.6%, while the added 0.5%.

The rose 0.3% after data showed the island state’s key non-oil exports shrank slightly less than expected in February from the last year.

The rose 0.2%, also benefiting from weakness in oil markets, while the surged 0.8% after logging sharp losses over the past week.

Forex News

Dollar slips after ECB rate decision, Fed hike seen

Published

6 months ago

March 28, 2023

Rohlan

Dollar slips after ECB rate decision, Fed hike seen

NEW YORK/LONDON (Reuters) -The dollar fell and the euro rose on Thursday after the European Central Bank raised interest rates as planned despite market chaos in recent days, in a sign the Federal Reserve also will likely raise rates next week as both stay on track to tame inflation.

The two currencies stuck to a narrow range before the ECB announced a half-percentage point rate hike as promised, with markets pricing an 80.5% likelihood that the Fed will lift rates by a quarter point on March 22, CME’s FedWatch Tool showed.

U.S. and euro zone government bond yields rose as stock markets on both sides of the Atlantic rallied after an initial volatile trading reaction by markets to the ECB decision.

“The market is looking at the ECB, seeing a central bank facing market uncertainty and taking the hawkish decision that it had hinted at in earlier guidance, being driven by its inflation mandate and saying ‘the Fed might be able to follow that similar template,'” said Brian Daingerfield, head of G-10 FX strategy at NatWest Markets.

The ECB has raised rates at the fastest pace on record and the Fed at its quickest in four decades to curb inflation. Higher rates on U.S. government debt than other countries has fortified the dollar, as has a relatively strong economy.

But a rout in global markets after Silicon Valley Bank collapsed in the United States last week and a plunge in the share value of Credit Suisse this week threatened to upend the ECB’s plans to raise rates.

“If they didn’t do anything, if there was no hike, people would have been more panicked. They would immediately have started speculating what are they hiding?” said Simona Mocuta, chief economist at State Street (NYSE:) Global Advisors in Boston.

“It also gives a sense of continuity in this moment of mayhem. It’s a bit of an anchor, as policymakers should be at times like this,” she said.

The euro fell as much as 0.25% after the ECB’s decision but later reversed course, as did the dollar. The euro was up 0.38% to $1.0615 while the fell 0.258%.

Currency and other markets were broadly calmer on Thursday after Credit Suisse said it would borrow up to $54 billion from the Swiss National Bank to shore up liquidity and investor confidence.

The bank’s shares had plunged as much as 30% on Wednesday.

That stability also helped the Swiss franc to strengthen, and the dollar at one point fell more than 1% against the franc to 0.9232, reversing some of its 2.15% surge on Wednesday – the largest daily gain since 2015.

Elsewhere, the safe-haven Japanese yen remained in favor even as markets calmed a little.

The Japanese yen weakened 0.04% to 133.47 per dollar as the U.S. currency slipped further from a nearly three-month high of 137.91 it hit on March 8.

Sterling was last trading at $1.212, up 0.46% on the day.

Currency bid prices at 3:24 p.m. (1924 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct Change High Bid Low Bid

Session

Dollar index 104.3600 104.6500 -0.26% 0.841% +104.7500 +104.2000

Euro/Dollar $1.0617 $1.0579 +0.37% -0.91% +$1.0635 +$1.0552

Dollar/Yen 133.4700 133.4750 -0.01% +1.79% +133.8200 +131.7200

Euro/Yen 141.71 141.10 +0.43% +1.00% +141.9200 +139.1500

Dollar/Swiss 0.9289 0.9338 -0.52% +0.47% +0.9339 +0.9233

Sterling/Dollar $1.2122 $1.2056 +0.56% +0.25% +$1.2127 +$1.2029