Connect with us
  • tg

Forex

Dollar gains as Powell pushes back on jumbo rate-cut bets

letizo News

Published

on

By Amanda Cooper and Brigid Riley

LONDON/TOKYO (Reuters) -The dollar rose broadly on Tuesday after Federal Reserve Chair Jerome Powell pushed back against bets on more supersized interest rate cuts.

The yen steadied close to the middle of its range against the dollar over the past month, after a volatile two days as traders sized up Japan’s incoming prime minister and his cabinet.

The Australian dollar edged towards Monday’s high after upbeat domestic retail sales data, while the euro was set for a third daily loss, following inflation data that made a rate cut this month more likely.

Over in the United States, Powell adopted a more hawkish tone in a speech at a conference in Tennessee, saying the world’s biggest central bank was likely to stick with quarter-percentage-point interest rate cuts from now on.

“This is not a committee that feels like it is in a hurry to cut rates quickly,” he said.

Traders remain certain that the Fed will cut again at the next policy-setting meeting in November, but slashed expectations for a 50 basis-point (bps) reduction to 35.4% from 53.3% a day earlier, according to CME Group’s (NASDAQ:) FedWatch Tool.

“The door has not been closed on a 50 bps cut, because if economic data tanks then such a cut is warranted. But Powell clearly thinks markets are overly excited” about upcoming cuts, said Matt Simpson, senior market analyst at City Index.

The Fed kicked off its easing cycle with a larger-than-expected half-point reduction last month.

Powell’s speech came ahead of a heavy week of U.S. data, including the Institute for Supply Management’s manufacturing index later on Tuesday and non-manufacturing report on Thursday, followed by Friday’s potentially crucial monthly jobs figures.

If the ISM non-manufacturing data and jobs report come in above expectations again this month, the dollar could see a “decent bounce” higher before eventually resuming its downward track, said Simpson.

The rose 0.4% to 101.11, marking a one-week high, having posted a third successive monthly decline on Monday, with a near 1% fall in September.

The dollar was up 0.1% at 143.57 yen , after whipsawing from as high as 146.495 yen on Friday to as low as 141.65 yen on Monday.

MARKETS SEE NEW JAPAN PM AS MONETARY HAWK

Shigeru Ishiba, due to be confirmed as Japan’s new premier later on Tuesday, is seen by markets as a monetary policy hawk, despite a recent toning-down of rhetoric on the need for policy normalisation.

He won his party’s leadership vote on Friday in one of the closest-ever races, and is now attempting to unify the party after calling a snap general election for Oct. 27.

Minutes of the Bank of Japan’s (BOJ) September meeting showed on Tuesday that policymakers discussed the need for caution on near-term interest rate hikes, with little impact on the market.

“Ultimately, our view on the BOJ remains more hawkish than the market’s pricing for 13 bps of tightening over the next three meetings, so even if the tactical picture is turning more skewed to the upside for dollar/yen – not least because of risks of correction higher in dollar rates – we are not ready to call for a sustained, multi-month yen underperformance,” ING strategist Francesco Pesole said.

The euro traded around one-week lows following a drop in German inflation to the lowest since early 2021, boosting speculation about another rate reduction this month.

The euro fell 0.4% on the day to $1.1085, around its lowest since Sept. 19.

European Central Bank President Christine Lagarde told parliament that “the latest developments strengthen our confidence that inflation will return to target in a timely manner”, and said this should be reflected in the Oct. 17 policy decision.

Deutsche Bank on Tuesday changed its ECB call, saying it now saw another cut in October, after previously forecasting the next cut in December.

© Reuters. FILE PHOTO: U.S. dollar banknotes are seen in this photo illustration taken February 12, 2018. REUTERS/Jose Luis Gonzalez/Illustration/File Photo

The was last down 0.12% on the day at $0.68995, not far from Monday’s 1-1/2 year peak of $0.6943, after Australian retail sales rebounded more than expected in August.

The traded at $0.63105, down 0.65%.

Forex

Dollar retains strength against peers on Trump trade

letizo News

Published

on

By Chibuike Oguh and Alun John

NEW YORK (Reuters) – The U.S. dollar strengthened against major peers on Thursday, trading at a one-year high and headed for a fifth straight session of gains, propelled by market expectations since Donald Trump clinched a dramatic return to the White House.

Markets anticipate that the incoming Trump administration will impose trade tariffs and tighten immigration as well as deepen the deficit, measures deemed to be inflationary.

The president-elect’s Republican Party will control both houses of Congress when he takes office in January, Edison Research projected on Wednesday, giving him wide powers to push his agenda.

The greenback climbed above 156 yen for the first time since July and was last up 0.56% to 156.38 per dollar. The euro slumped to its weakest since November 2023 and was down 0.45% at $1.05165 in choppy trading. Sterling hit its lowest on the dollar in four months and was last down 0.44% to $1.2651.

Following his election, the market has been looking at Trump’s appointment and seeing that he is not going to compromise on his campaign goals, whether it’s tariffs or China, said Steven Englander, head of G10 FX strategy at Standard Chartered (OTC:) in New York. “The market is assuming that he’s going to go ahead and implement all the things that he’s promised to do,” he said.

U.S. producer prices picked up in October, the Labor Department reported on Thursday, a day after data showed that consumer inflation had barely budged last month. The number of Americans filing new applications for unemployment benefits fell last week, suggesting labor market strength, according to the Labor Department.

The data did not change views that the Federal Reserve would deliver a third interest rate cut next month.

Fed chair Jerome Powell said on Thursday there was no need to rush rate cuts given the strong U.S. economy. His speech echoed earlier comments on Thursday by Federal Reserve governor Adriana Kugler and Richmond Fed President Thomas Barkin.

The , which measures the currency against six top counterparts including the euro and the yen, rose 0.17% to 106.64, after reaching as high as 107.07, its highest since early November 2023. The yield on benchmark U.S. 10-year notes fell 3.7 basis points to 4.414%.

pulled back from a record high of $93,480 overnight and was last up 0.96% to $89,489. Trump has vowed to make the United States “the crypto capital of the planet.” declined 0.27% to $3,144.

The Swiss franc remained under pressure against the dollar, which was up 0.3% to 0.889 franc. The Australian dollar fell to a three-month low after marginally weaker jobs data, weakening to as low as $0.6453.

© Reuters. U.S. dollar banknotes are displayed in this illustration taken, February 14, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

“The price action that we’ve had is expected given the election outcome and the logic behind it is built on expectations rather than actualities: expectations of fiscal stimulus, tariffs and deregulation,” said Daragh Maher, head of FX strategy, Americas, at HSBC in New York.

“We’ve been in the dollar-bullish camp, so this seats neatly with our narrative, but clearly there’s been a big repricing.”

Continue Reading

Forex

UBS raises USD/JPY forecast, says another jump to 160 is possible

letizo News

Published

on

Investing.com — UBS has raised its forecast for the in a note Thursday, expecting significant fluctuations in the exchange rate over the coming year.

The bank now projects the currency pair to reach 155 by December 2024, followed by 152 in March 2025, 150 in June, and 147 in September.

By year-end 2025, UBS targets 145, a revision from its earlier predictions of 147, 143, 140, and 138, respectively.

According to UBS, a near-term surge to 158-160 remains possible, especially if U.S. 10-year yields rise another 30-40 basis points, potentially hitting 4.8%.

“Based on sensitivity analysis over the past three years, a 10bp widening of the US-Japan 10-year yield differential coincides with a one-yen rise in the USDJPY exchange rate,” UBS explained.

If U.S. bond yields indeed spike to 4.8%, the bank says USD/JPY could temporarily reach 160, though they view this level as “unsustainable” and likely to invite Japanese intervention, as observed during similar peaks earlier in 2024.

UBS analysts believe the USD/JPY will face downward pressure in 2025, driven by several factors. A key factor is the anticipated Fed rate-cutting cycle, which UBS expects will lead to lower U.S. yields.

“We think current USDJPY levels are higher than justified by yield differentials,” UBS notes, estimating that the currency pair should trend toward 145-146.

Additionally, trade tensions and a potential Trump-led administration’s focus on a stronger yen may reinforce this trend.

For investors, UBS suggests that any near-term spike toward 160 could be an opportunity to “tactically sell USDJPY.” Over the long term, UBS sees multiple forces supporting a downtrend, with USD/JPY likely to end 2025 at 145.

Continue Reading

Forex

Sterling squashed by dollar steamroller, traders watch out for Reeves’ speech

letizo News

Published

on

LONDON (Reuters) – The pound dropped to its lowest against the dollar since early July on Thursday, brushed aside by the U.S. currency’s relentless rise following Donald Trump’s U.S. election victory.

Those developments are swamping British news for investors, although they will be keeping an eye on finance minister Rachel Reeves’ first Mansion House speech to leaders of the City, as well as remarks from Bank of England governor Andrew Bailey.

Reeves said in advance that she wants Britain to build a slew of “megafunds” with up to 80 billion pounds ($102 billion) in fresh investment firepower, under plans for the biggest shake-up in British pensions seen in decades.

Sterling was last down 0.6% on the dollar at 1.2632, its lowest since July 2, falling through its early August low in mid-morning London trading.

The move was largely in line with peers. The euro was down 0.6%, at a one year low, and the dollar was around 0.5% higher on the Japanese yen and the Swiss franc. [FRX/]

“Cable (pound/dollar) is a dollar story at the moment,” said Nick Rees, currency analyst at Monex Europe.

Higher trade tariffs and tighter immigration under the incoming Trump administration are projected to fuel inflation, potentially slowing the Federal Reserve’s rate cutting cycle longer term.

These, alongside expectations for deeper deficit spending and higher short term economic growth are lifting Treasury yields, providing the dollar with additional support.

The benchmark hit 4.483% on Thursday, its highest since July. [US/]

© Reuters. FILE PHOTO: Pound and U.S. dollar banknotes are seen in this illustration taken January 6, 2020. REUTERS/Dado Ruvic/Illustration/File Photo

The pound was steady on the euro at 83.12 pence to the common currency. It has been gradually strengthening in recent months, “a reflection of European political risk which should be negative for the euro,” said Rees, pointing to the situation in France and Germany.

The collapse of Germany’s ruling coalition last week forced the country into a snap election that will is likely to take place in February, while the French government is trying to push its draft budget for next year over the line, despite lacking a majority in parliament.

Continue Reading

Trending

©2021-2024 Letizo All Rights Reserved