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Daily Currencies Ratings

Dollar just off 20-year highs, rally hinges on Fed signals

The dollar index pulled further away from 20-year highs on Wednesday, having already priced the U.S. Federal Reserve to raise interest rates by a half-point later in the day and by some 250 basis points by year-end. Currency markets have settled in to wait for the Fed’s 1800 GMT announcement and Chairman Jerome Powell’s news conference, having endured wild gyrations in recent weeks, with the dollar soaring to 20-year highs against a basket of currencies. Money markets are betting the Fed will raise rates as high as 3.6% by end-2023 ...

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FX Daily: Hanging on to the dollar ahead of the Fed

USD: Remaining supported into the FOMC The dollar has continued to strengthen ahead of tomorrow’s FOMC meeting, where a 50bp rate hike and the start of quantitative tightening are widely expected to be announced. We sum up our views ahead of tomorrow’s meeting here. From an FX perspective, we would still refrain from making a confident call that a top in the dollar has been reached. Even if the Fed-induced strength might appear more limited now that an aggressive tightening cycle has been priced in, an external environment where markets ...

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FX Daily: Moving to DEFCON2 on Japanese FX intervention

USD: Today’s Employment Cost Index will be key FX markets are slightly calmer today, helped by some stability in Chinese asset markets. The renminbi, a key agent in recent FX volatility, has firmed a little as China’s Politburo has promised to do more to support growth. The sharp rally in the whole USD/Asia FX complex over the last week had contributed to broad strength in the dollar, although this trend now may be due a pause. Away from China’s commitment to support growth, we have seen both Japanese and Korean ...

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Globalised yuan complicates Beijing’s bid to stem capital flight

This month’s dive in China’s currency has revived memories of past routs but market participants say increased foreign holdings of yuan assets mean authorities are much less likely to curb the selling than they were in previous years. The yuan hit an 18-month low on Friday and has slid more than 4.5% on the dollar in April, setting it on course for its worst month since currency market reforms of 1994. However, unlike 2018-19, when the yuan fell through the U.S.-China trade war, or 2015-16, when a domestic stampede to ...

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Euro peers over the cliff at dollar parity as recession looms

The euro’s drop to a five-year low is rekindling the possibility the currency will reach parity versus the dollar for the first time in two decades, as fears of a euro zone recession encourage investors to pile on the bearish bets. Russia’s move to cut off gas supplies to Bulgaria and Poland is the latest blow for the currency, already pressured by the twin headwinds of a surging dollar and sweeping COVID-linked lockdowns in China, a major market for bloc exports. Germany and other European countries could be next in ...

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Dollar pulls back, still set for best month since 2015

The dollar edged down from its recent 20-year high on Friday but was still on track for its best month since 2015, having been boosted by a combination of expectations for U.S. rate hikes and growth concerns in China and Europe. In the final trading day of a seismic month for currency markets, major currency pairs pulled back slightly from their recent trajectories as global markets stabilised and a Chinese tech rally put Asian shares on track for their best day in six weeks. At 0741 GMT, the dollar index ...

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FX Daily: Dollar boom

USD: Dollar booming in 2022, bust in ’23? Global events are conspiring to send the dollar a lot higher. The DXY, one version of the trade-weighted dollar, is a whisker away from the 2016 high. Above that one has to look back to 2002 for any higher levels. The Federal Reserve looks set to embark on an aggressive tightening cycle this year to stamp out inflation – and has the most cause to do that because of domestically generated inflation. War in Europe and the risk of an abrupt cut-off ...

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Dollar borrowing costs rise as euro, yen fall

Borrowing costs for U.S. dollars in currency derivatives markets rose sharply on Thursday after the dollar surged to within striking distance of its highest levels in two decades. The dollar rose past the psychological level of 130 yen on Thursday for the first time since 2002, after the Bank of Japan (BOJ) doubled-down on its super-low yield policy, while the euro briefly fell below another symbolic mark of $1.05. [FRX/] Three-month cross-currency swaps for euro-dollar widened to their highest level since March 8 at around 19 basis points. That translated ...

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China’s central bank steps in to slow its rapidly weakening currency, as yuan hits one-year lows

The Chinese yuan strengthened slightly against the U.S. dollar on Wednesday, reversing a sharp weakening trend after the People’s Bank of China signaled support for its currency. The yuan has tumbled by about 3% this month as the U.S. dollar strengthened, according to Wind Information. Prolonged Covid controls and worries about Chinese economic growth have also weakened sentiment on the yuan. On Monday, the PBOC announced it would cut the deposits by 1 percentage point to 8%, effective May 15. The move reduces the amount of foreign currency that banks ...

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Funds shun sterling as UK data dam bursts: McGeever

Evidence is rapidly mounting that Britain’s cost of living crisis is starting to bite, and hedge funds are in prime position to cash in on sterling’s equally rapid slide against the dollar. U.S. futures market data show that funds have amassed their biggest wager against the pound since October 2019, a bet now worth close to $5 billion. The speed with which speculators have turned against the pound has been remarkable. Just before Russia’s Feb. 24 invasion of Ukraine, Commodity Futures Trading Commission data showed that funds held a small ...

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FX Daily: Dollar strength is here to stay

USD: Turbulent markets mean supported dollar The respite to risk assets offered by China’s policymakers yesterday proved short-lived, and equities went through another rough session as the theme of global monetary tightening and slowing growth continued to resonate loudly across markets. In such an environment, trying to pick the tops in the dollar rally is a risky challenge. The Fed’s tightening cycle is largely priced in, but we surely do not see the divergence between market expectations and central bank communication that we witness in the case of other major ...

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FX Daily: Volatility on the rise

USD: consolidation in store after Monday’s wild ride FX markets are calmer today after Monday’s wild ride. That ride was largely caused by a re-appraisal of China, where spreading lockdowns and quite a rare, fast drop in the renminbi spread a little panic through the emerging market FX complex. That panic has subsided a little after Chinese policymakers overnight promised to deliver more monetary support (having disappointed over recent weeks) and to speed up its review of the big tech/platform economy (helping Asian tech stocks overnight). The People’s Bank of ...

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Dollar soars to new two-year high on growth fears and rate bets

The dollar roared to a new two-year high on Tuesday and the euro hit its weakest since March 2020 as concerns about the economic impact of China’s COVID-19 lockdowns and aggressive U.S. interest rate hike expectations boosted the greenback. With markets facing a multitude of risks including central banks tightening policy just as economic growth momentum slows, investors have been buying up dollars. The dollar index, which measures the U.S. currency against a basket of rivals, has risen 6.5% so far in 2022. It has gained 3.65% so far this ...

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Growth slowdown fears temper bullishness on commodity currencies

After huge rallies fed by blockbuster commodity price surges, the tide may be turning for currencies such as the Aussie dollar and Colombian peso as fears of a global growth slowdown take hold in markets. As inflation and higher borrowing costs crimp business and consumer spending, the International Monetary Fund and World Bank this week slashed global growth forecasts by nearly a percentage point and flagged the risk of further drops stemming from China’s COVID lockdowns and sanctions on Russia . The warnings knocked prices of oil and metals, though ...

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Asia FX bearish bets firm as cenbanks catch-up to Fed tightening

Bearish bets on most Asian currencies firmed, a Reuters poll found on Thursday, as several regional central banks trail the U.S. Federal Reserve in tightening their monetary policies to fight red-hot inflation. Analysts turned short on the Chinese yuan CNY=CFXS for the first time since early-October due to worries of an economic slowdown in the country caused by COVID-19 lockdowns, the fortnightly poll of 14 respondents showed. “A combination of a lack of policy support and zero-COVID stance has weakened China’s growth prospects and weighed on yuan sentiments,” analysts at ...

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