Connect with us
  • tg

Forex

Dollar slips after Biden pulls out, euro rebounds after losses

letizo News

Published

on

Investing.com – The U.S. dollar slipped lower Monday following U.S. President Joe Biden’s decision to end his re-election campaign, with the euro benefiting despite its weak tone after last week’s European Central Bank meeting.

At 06:00 ET (10:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.2% lower to 103.942, flipping after posting its first weekly gain in three last week. 

Dollar retreats amid political uncertainty

The dollar has retreated following the weekend’s news that President Biden will no longer seek reelection, endorsing Vice President Kamala Harris as his potential replacement.

“Investors will now switch their attention to how Kamala Harris fares against Donald Trump in the opinion polls – assuming she is appointed the presidential candidate at the Democratic National Convention on 19-22 August,” said analysts at ING, in a note.  

The dollar had received a boost as the likelihood of a Trump presidency grew following Biden’s disastrous debate performance last month and questions about his age and health.

The main economic data release this week will arrive on Friday, with June’s personal consumption expenditures index set to test market expectations that the Federal Reserve is all but certain to cut interest rates in September.

Economists are expecting the to have climbed 0.1% for the second straight month, which would bring three-month annualized core inflation down to the slowest pace this year, below the Fed’s 2% target.

Euro bounces in wake of ECB decision

rose 0.2% to 1.0893, bouncing after weakness in the wake of the keeping rates steady at its meeting last week.

Analysts flagged that the ECB offered no concerted push back at last week’s policy meeting on the heavy pricing for a cut in September, which remains a strong base case.

“This week’s eurozone business sentiment readings, due Wednesday and Thursday, will help shape the narrative that policy is too restrictive and could prompt a little downside for the euro,” said ING.

Markets are pricing in almost two ECB rate cuts for the rest of the year.

traded 0.1% higher at 1.2931, after topping 1.30 for the first time in a year last week in the wake of the decisive election victory for the Labour Party, ending 14 years of sometimes chaotic Conservative rule.

“Some are no doubt making the case that this is a removal of the Brexit risk premium in sterling, aided by new Prime Minister Keir Starmer’s desire to engage more closely with Europe,” said ING.

“While we have some sympathy with that view, we ascribe sterling strength more to sticky UK inflation and the limited pricing of BoE rate cuts this year, plus July’s drop in the dollar on the back of softer US price data.”

Yuan slips after PBOC rate cut 

In Asia, rose 0.1% to 7.2727, close to levels last seen in November.

Weakness in the yuan came after the People’s Bank of China unexpectedly cut its benchmark to further loosen monetary policy and support the economy.

The cut comes as China struggles with a slowing economic recovery- concerns over which have added to mounting pressure on the yuan.

Recent weakness in the yuan also came amid concerns over a Trump presidency, given that Trump has maintained a negative rhetoric towards Beijing. 

fell 0.5% to 156.63, with the yen continuing to see wild swings amid speculation that the Japanese government has intervened in currency markets.

 

 

Forex

Dollar bounces after sharp loss; euro retreats on Lagarde comment

letizo News

Published

on

Investing.com – The US dollar edged higher Monday, rebounding after the sharp losses at the end of last week on signs of cooling inflationary pressures, while the euro slipped following dovish comments from ECB head Christine Lagarde.

At 05:00 ET (10:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.4% higher to 107.750, after falling sharply from a two-year high on Friday.

Dollar bounces after sharp retreat

The dollar bounced Monday after falling sharply on Friday as the Federal Reserve’s preferred showed moderate monthly rises in prices, with a measure of underlying inflation posting its smallest gain in six months. 

That eased some concerns about how much the may cut in 2025, which had risen following the hawkish US rate outlook after the last Fed policy meeting of the year.

That said, traders are pricing in 38 basis points of rate cuts next year, shy of the two 25 bp rate cuts the Fed projected last week, with the market pushing the first easing of 2025 out to June, with a cut in March priced at around 53%.

Trading volumes are likely to thin out as the year-end approaches, with this trading week shortened by the festive period.

Eurozone “very close” to ECB inflation goal

In Europe, fell 0.1% to 1.0414, near a two-year low it touched in November, down 5.5% this year, after European Central Bank President said the eurozone was getting “very close” to reaching the central bank’s medium-term inflation goal.

“We’re getting very close to that stage when we can declare that we have sustainably brought inflation to our medium-term 2%,” Lagarde said in an interview published by the Financial Times on Monday.

Earlier in December, Lagarde had said the central bank would cut interest rates further if inflation continued to ease towards its 2% target, as curbing growth was no longer necessary.

The lowered its key rate last week for the fourth time this year, and is likely to cut interest rates further in 2025 if inflation worries fade.

traded largely flat at 1.2571, after data showed that Britain’s economy failed to grow in the third quarter, adding to the signs of an economic slowdown.

The Office for National Statistics lowered its estimate for the change in output to 0.0% in the July-to-September period from a previous estimate of 0.1% growth.

The ONS also cut its estimate for growth in the second quarter to 0.4% from a previous 0.5%.

policymakers voted 6-3 to keep interest rates on hold last week, a bigger split than expected, amid worries over a slowing economy.

Yuan hits one-year high

In Asia, rose 0.2% to 156.72, after rising as far as 158 last week following dovish signals from the .

The BOJ signaled that it was not considering interest rate hikes in the near-term despite a recent pick-up in inflation, and could raise rates by as late as March 2025.

edged 0.2% higher to 7.3080, hitting a one-year high as traders continued to fret over China’s economic outlook. While Beijing is expected to ramp up fiscal spending in the coming year to support the economy, looser monetary conditions are expected to undermine the yuan.

 

Continue Reading

Forex

Asia FX muted, dollar slips from 2-yr high on soft inflation data

letizo News

Published

on

Investing.com– Most Asian currencies moved little on Monday, while the dollar steadied from a tumble from over two-year highs after soft U.S. inflation data spurred some hopes that interest rates will still fall in 2025. 

Asian currencies were nursing steep losses against the dollar from last week, although they trimmed some declines on Friday after the soft inflation data. The outlook for regional markets also remains clouded by uncertainty over U.S. interest rates and policy under incoming President Donald Trump. 

Dollar slips from 2-yr high as PCE data misses expectations 

The and both steadied on Monday after clocking sharp losses on Friday.

The greenback slid from an over two-year peak after data- the Federal Reserve’s preferred inflation gauge- read softer-than-expected on Friday. 

Still, the reading remained above the Fed’s 2% annual target, keeping uncertainty over interest rates in play.

The Fed had cut interest rates by 25 basis points last week, but flagged a slower pace of interest rate cuts in the coming year, citing concerns over sticky inflation and resilience in the labor market. 

The Fed is expected to cut rates twice in 2025, although the path of rates still remains uncertain.

Markets took some relief from the government avoiding a shutdown after lawmakers approved an eleventh-hour spending bill.

Asia FX pressured by rate uncertainty 

Despite clocking some gains on Friday, most Asian currencies were still trading lower for December, as the outlook for interest rates remained uncertain.

The Japanese yen’s pair rose 0.1% to around 156.59 yen, after rising as far as 158 yen last week following dovish signals from the Bank of Japan.

The BOJ signaled that it was not considering interest rate hikes in the near-term despite a recent pick-up in inflation, and could raise rates by as late as March 2025. 

The Chinese yuan’s pair rose 0.1%, hitting a one-year high as traders continued to fret over China’s economic outlook. While Beijing is expected to ramp up fiscal spending in the coming year to support the economy, looser monetary conditions are expected to undermine the yuan. 

The Singapore dollar’s pair was flat ahead of inflation data due later in the day, while the South Korea’s won’s pair rose 0.3%.

The Australian dollar’s pair rose slightly after sinking to a two-year low last week. 

The Indian rupee’s pair steadied after hitting a record high of over 85 rupees last week.

 

Continue Reading

Forex

Dollar to weaken less than expected next year: UBS

letizo News

Published

on

Investing.com — The dollar recently notched fresh year-to-date highs against its rivals and is likely to remain strong after the Federal Reserve leaned more hawkish at its recent December meeting, analysts from UBS said in a recent note.

“While we still expect the dollar to fall, we now see less weakness in 2025 given these factors and adjust our forecasts slightly,” analysts from UBS said in a recent note.

The less bearish view on the USD comes in the wake of the greenback making fresh year-to-date highs in key exchange rates and the expectations for fewer U.S. rate cuts. 

“The USD has been driven lately by prospects of fewer Fed rate cuts and tariff risks,” the analysts said.

The euro has been particularly affected by dollar strength, but is expected to trade around $1.05 against the greenback in the first half of 2025, the analysts forecast. 

But a significant drop toward parity for the can’t be ruled out, “due to real tariff threats or further divergence in the macro backdrop between the US and Europe,” the analysts added.

Still, any move toward parity should be short-lived, the analysts said, amid expectations for the economic backdrop in Europe to improve in the second half of the year, narrowing the divergence between Europe and U.S. yields. 

“The trajectory back into the middle of the trading range or higher, 1.08 to 1.10, comes with the view that two-year yield differentials will still narrow to some degree and better macro data out of Europe provide some underlying support for EURUSD in 2H25,” the analysts said.

Continue Reading

Trending

©2021-2024 Letizo All Rights Reserved