The US dollar index, which compares the dollar against a basket of six major currencies, soared to a three-week high today. It last traded at 103.25. The index also added 1.1% on Friday. The dollar held firm against the common currency during the session on Monday. Investors expect the US Federal Reserve to raise its benchmark rate above 5%. According to new data, the labor market continues to rise. But the agency continues to try to bring inflation down.
On Wednesday, the Federal Reserve raised its interest rates by 25 basis points. The agency also announced that little by little it was winning the battle against inflation. After such a statement, traders concluded that policy makers plan to slow down their aggressive rate hikes in the coming months.
Also, new reports showed that the service industry rebounded last month. The US Non-Farm Payrolls number also surprised markets. On Monday, traders bet that the Federal Reserve’s policy rate would peak at 5.05% in June. The dollar benefited from these data.
Meanwhile, tensions rose between the US and China after the incident off the coast of South Carolina on Saturday. US military fighter plane shot down a Chinese balloon, suspecting it to be a spy. The appeal of the safe-haven dollar only increased after this news.
Tapas Strickland, head of market economics at National Australia Bank, said the new data could be bad news if the agency perceives it as supporting its case for two more rate hikes. In such a case, the Fed could decide to keep rates high for a longer period.
How does the euro compare to the dollar now?
He euro it plunged 0.2% on Monday. It reached lows of almost three weeks, trading at $1.0769 at last. The common currency shot up to a 10-month high on Thursday. The European Central Bank raised its deposit rate to 2.5% at its meeting that day. He ECB it also stated that it would deliver a 50 basis point rate increase in March.
The risk of the European Central Bank not raising interest rates enough is greater than the risk of raising them too much; Especially considering that inflation in the eurozone is still too high, Austrian central bank chief Robert Holzmann said on Monday.
In Asia, the japanese yen fell 0.5% today. It changed hands at 131.90 per American dollar finally, after falling to a three-week low of 132.60 earlier in the session. The Nikkei newspaper reported that Bank of Japan Deputy Governor Masayoshi amamiya could assume the position of governor after the current one. The newspaper cited anonymous government and ruling party sources in its article.
However, on Monday, Deputy Chief Cabinet Secretary Yoshihiko Isozaki announced at the press conference that the Nikkei report was untrue. He Boxwood it has been keeping its policy rate loose since the coronavirus pandemic. The central bank claims it is necessary to avoid an economic downturn. However, such a policy is criticized by many parties, including opposition politicians and market participants.
According to Saxo Markets strategists, Amamiya has helped Kuroda since 2013 on monetary policy. He is considered by many to be the most moderate of the contenders. So if he takes office, the Bank of Japan may continue its ultra-loose policy much longer than economists expected.
what about the MS coins?
On Monday, Chinese stocks tumbled on heightened tensions between China and the United States. At the same time, the Turkish lira collapsed to a record low. In central Turkey and northwestern Syria, a magnitude 7.8 earthquake caused tremendous damage. Consequently, the lira changed hands at 18:85 against the dollar. However, the coin leveled off a bit later in the session.
Piotr Matys, eldest special effects In Touch Capital Markets analyst, noted that Turkey’s inflation remains worryingly high. However, President Tayyip Erdogan wants the central bank to cut interest rates. If the bank acts, real interest rates are likely to fall deeper into negative territory.
He MSCI index for MS coins it fell 0.8% on Monday. At the same time, the stocks index 2.2% shaved. Stocks looked poised for their worst daily performance in almost 3.5 months.
south african rand it also decreased 0.3% against the US dollar. Investors are waiting for the Investing in African Mining Indaba conference. It’s for later today. Meanwhile, actions in south africa fell 0.5%. Last week, foreign investors bought a net amount of R1.17 billion of South African shares.
