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Dollar Up, Yen Down Over Surprise Japan Election Result

By Gina Lee

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Dollar Up, Yen Down Over Surprise Japan Election Result
© Reuters.

By Gina Lee

Investing.com – The dollar was up on Monday morning in Asia, remaining near a two-and-a-half-week high. Increasing inflation in the U.S. that strengthened the case for earlier U.S. Federal Reserve interest rate hikes gave the U.S. currency a boost.

The that tracks the greenback against a basket of other currencies inched up 0.08% to 94.195 by 12:34 AM ET (4:34 AM GMT). The index remained near Friday’s peak of 94.302, a level not hit since Oct. 13.

The pair was up 0.24% to 114.28.

The pair was down 0.27% to 0.7501 while the pair inched up 0.05% to 0.7168.

The pair inched down 0.01% to 6.4046, with China’s for October at 50.6. The and PMIs, released the day before, were at 49.2 and 52.4 respectively.

The pair edged down 0.11% to 1.3676.

The dollar also approached a one-and-a-half-week high to the yen after Japanese Prime Minister Fumio Kishida’s ruling Liberal Democratic Party held its strong majority in Sunday’s parliamentary election in a surprise move. This reduces the political uncertainty in the country and allows Kishida to press forward with ramping up stimulus.

“The reduction in political uncertainty is playing out with slight yen weakness this morning. The bigger driver of dollar-yen direction going ahead remains the Fed,” Barclays (LON:) senior FX strategist Shinichiro Kadota told Reuters.

Data released on Friday showed that the U.S. personal consumption expenditures price index was at 4.4 while growing 0.3% , in September. The Fed’s preferred inflation measure continued a run of inflation at levels not seen in 30 years and solidified market expectations for an interest rate hike around mid-2022.

Following the data’s release, futures on the fed funds rate, which track short-term rate expectations, priced in a 90% chance of quarter-point tightening by June 2022, factoring in another rate increase by December.

The Fed is widely expected to announce that it will begin asset tapering when it hands down its on Wednesday. The will hand down its policy decision on Tuesday, with the following on Thursday.

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Forex

History low for the pound British

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history low for the pound british

Today we can observe history low for the British pound. The British pound has fallen in the international forex market by almost 5% against the dollar – to a record low of $1.0384. The pound fell 0.85% against the U.S. dollar to $1.0762.

The British currency depreciated after the Ministry of Finance of the country promised to continue cutting taxes, raising fears that the new policy will lead to a sharp rise in inflation and the national debt, Bloomberg wrote. The pound’s collapse was the biggest intraday drop since March 2020, when markets were panicked by the start of the COVID-19 pandemic, the publication estimated.

The sell-off in the currency began on Friday, after the government announced a plan for a massive tax cut in the U.K., which will affect individuals and businesses and increase the budget deficit.

“History low for the British pound shows that markets do not trust the UK,” said Saxo Capital Markets strategist Jessica Amir. – The pound is one step away from parity with the dollar, and things will only get worse from here.”

The British currency has already fallen 20% against the dollar this year. According to Bloomberg, the fall in the British pound sterling in 2022 surpassed the collapse seen after the vote to leave the European Union (Brexit) in 2016. At that time, the U.K. currency depreciated by about 16% in one year.

Earlier we reported that the dollar is getting cheaper against most currencies after rising the day before.

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The dollar is getting cheaper against most currencies after rising the day before. Global money is getting cheaper

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money getting cheaper

The dollar is getting cheaper against the euro, the yen and the pound sterling today after a solid rise in the previous session on the background of the fact that all the world’s money’s getting cheaper. 

The dollar is correcting because investors are trying to fix profits after its significant strengthening, said Trading Economics. Experts believe that the U.S. currency will continue to strengthen on the background of a rapid tightening of monetary policy by the Federal Reserve (FRS). Also, the dollar is supported by reducing the appetite for risk in world markets.

Further growth in volatility in the financial markets will strengthen the dollar because of its status as a “safe haven” currency, said an analyst on the currency market, CBA Carol Kong.

The euro rose 0.53% to $0.9660 against the dollar, up from $0.9609 at the close of the previous session. The day before, European currencies were cheaper against the dollar by 0.8%.

The pound rose by 1.07% to $1.0803 during the trading session, compared to $1.0689 the day before. The exchange rate of the dollar against yen decreased by 0.30% – down to 144.31 yen against 144.75 yen by the end of the previous session. On Monday the American currency grew by 1.5% against the pound and by 1% against the yen.

The index, calculated by ICE, which shows the dollar trend against six currencies (euro, Swiss franc, yen, Canadian dollar, pound sterling and the Swedish krone), was losing 0.5% during trading. The day before, the indicator had updated its 20-year high.

Earlier we reported that the Nasdaq is on the plus side amid signs that growth stocks are recovering.

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Nasdaq index rises again amid signs growth stocks are recovering

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current Nasdaq index

The Nasdaq index rises again early in Monday’s session as growth stocks try to recover from a sharp sell-off sparked by fears that Fed action will lead to a recession.

The S&P 500 also showed signs of stabilizing after briefly falling below its mid-June closing low of 3.666 on Friday, nearly wiping out the sharp rebound it had achieved over the summer.

The Fed’s announcement that high interest rates could hold out until late 2023 sent the three major U.S. stock indexes down 4-5% last week, with the Dow Jones index near bear market territory on Friday.

Growth was led by sectors that included securities of mega-capitalization companies, including technology S5INFT, communications services S5TELS, and consumer discretionary S5COND.

Shares of Apple Inc, Microsoft Corp, amazon.com Inc, and Tesla Inc, rose 0.9 percent to 2.0 percent, supporting the current Nasdaq index.

“We’re just seeing gains driven by a sense of relief after a very tough period for the Nasdaq and growth stocks,” said Jeffrey Schulze of ClearBridge Investments.

“Obviously, the last month has been very tough for growth stocks as investors re-evaluate higher Fed rates and, ultimately, the ultimate rate of this cycle of monetary policy tightening.”

Earlier we reported that Wall Street closed in the negative; the Dow confirmed a bear market.

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