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Daily Currencies Ratings

FX Daily: Focus on a ‘cosmetic’ Czech rate adjustment

USD: 10 year real yields hit zero. What does it mean for FX? Having enjoyed a strong 3% rally so far this month, the dollar has now entered a consolidatory phase. Driving that may be the fact that the rise in longer-dated US Treasury yields appears to have stalled at the 3% area, consistent with the 10-year US real yield testing zero for the first time since early 2020. Driving this month’s sell-off in Treasuries has very much been the story of the early and more aggressive Fed balance sheet ...

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Euro at one-week highs as rate hike bets grow

The euro perked up to a one-week high on Thursday as market expectations solidified for a first interest rate hike from the European Central Bank as early as July. Joachim Nagel, president of Germany’s Bundesbank, joined fellow policymakers this week in saying the ECB could raise interest rates at the start of the third quarter.. Another policymaker Martins Kazaks said this week a rate hike in July “was possible”. Against the U.S. dollar, the euro rose 0.4% to $1.0895 and its highest levels since April 14. The euro’s rise was ...

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Yen’s past points to more pain ahead

The yen has tumbled 10% to a two-decade low to the dollar in a matter of weeks. But history suggests that still isn’t cheap, and investors are betting that it’s going to fall even further. The drop, precipitous for a major currency in the $6.6-trillion-a-day global foreign exchange market, has been triggered by the fragility of the world’s third-largest economy and the Bank of Japan’s reluctance to follow the United States and the rest of the world in tightening monetary policy. That has created an unfavourable gap in government bond ...

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FX Daily: Asian FX in focus as dollar strength continues

USD: Dollar holds gains Perhaps one of the surprises in financial markets this year is how well global equities are coping with the commodities supply shock and the 120bp surge in US 10-year yields over the last six weeks. So much for the bond market tantrum. That is not to say that the rise in US real yields into positive territory will not start to weigh on activity, but the fact that US equity markets in particular have held up well has allowed Fed tightening expectations to remain strong (a ...

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Hedge funds’ bullish dollar view distorted by yen outlier: McGeever

Hedge funds remain bullish on the dollar, holding a net long dollar position in currency futures markets for more than nine months. But remove the Japanese yen from the equation, and the picture is much more blurred. U.S. futures market data show that speculators trimmed the value of their overall long dollar position against a range of currencies for a second week, but increased their net short yen position to the largest in three and a half years. Indeed, there are only a handful of periods since Commodity Futures Trading ...

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Dollar scales fresh two-decade peak to yen as BOJ targets yields

The dollar climbed to a fresh two-decade peak to the yen on Wednesday, buoyed as the Bank of Japan stepped into the market again to defend its ultra-low interest-rate policy, in contrast with ever more Federal Reserve officials pushing for sizeable rate hikes. The greenback reached 129.43 yen JPY=EBS for the first time since April 2002 before easing to last trade 0.21% lower at 128.615. “The morning announcement by the BOJ caused dollar-yen to spike higher, and so after that I think it just sort of pulled back, but I ...

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US dollar continues to garner support from Fed hike expectations

The dollar edged higher on Monday in thin and choppy trading, in line with higher U.S. Treasury yields as investors braced for multiple half a percentage-point rate hikes this year from the Federal Reserve. Volume was light on the day with Hong Kong, European, and Australia, and New Zealand markets closed for Easter Monday. The dollar index, a gauge of the greenback’s value against six major currencies, rose 0.1per cent to 100.61. Late last week, the index hit its highest in two years. “There is indeed history that when the ...

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FX Daily: More downside risk for the euro and yen

USD: Further room to strengthen Hawkish expectations on Fed tightening have continued to offer a supportive narrative to the dollar, which has retained good momentum after the Easter break. Yesterday, FOMC arch-hawk James Bullard signalled openness to a 75bp hike, despite acknowledging that this is not his base case. The yen is once again emerging as the worst-performing currency in the G10, and with USD/JPY now at 128.00, the perceived probability of FX intervention in Japan is set to rise. As discussed here, no intervention at the 130.00 mark could ...

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Dollar steadies after hitting fresh 20-year high on yen

The dollar rose on Tuesday to a fresh 20-year high against the Japanese yen and tested a two-year peak against the euro, supported by high U.S. Treasury yields. The dollar index =USD, which measures the greenback against six other currencies, climbed past 101 for the first time in more than two years. It edged 0.07% lower at 100.74, down 0.1% at 0825 GMT. The dollar’s gains have been most striking against the yen JPY=, climbing to its highest level of 128.32 yen against the Japanese currency since May 2002. It ...

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FX Daily: ECB message may disappoint hawkish expectations

USD: Markets starting to price in a fast descent in US CPI Markets have continued to scale back the Fed’s tightening expectations after Tuesday’s US CPI numbers seemed to indicate inflation may have peaked. The 2yr USD swap rate – which accurately mirrors policy rate expectations – has seen a 25bp pull-back since the 11 April high. The discussion does not concern the Fed’s next moves this year, as markets continue to price in back-to-back 50bp hikes into the summer and around 200bp of total tightening by year-end. Instead, investors ...

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Euro edges up ahead of ECB meeting

The euro rose on Thursday ahead of the European Central Bank meeting expected to outline a clearer schedule for unwinding stimulus, opening up the possibility of a first rate hike later this year. After touching its lowest since early March on Wednesday, the euro rose 0.12% to $1.09050 at 0835 GMT, ahead of the meeting. The ECB is expected to give some clues on its coming policy amid record-high inflation and a war-related recession. Antje Praefcke, FX analyst at Commerzbank (ETR:CBKG) said the market will refrain from a strong preference ...

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‘Long time, if ever’ before dollar replaced as key global currency – Yellen

U.S. Treasury Secretary Janet Yellen said it would be “a long time, if ever” before the U.S. dollar was replaced as the key reserve currency in the global economy. The dollar’s dominance as a means of exchange is fundamentally due to the strength of the U.S. economy, financial system and confidence in U.S. financial markets, Yellen said at an event hosted by the Atlantic Council think tank. Source: Reuters (Reporting by David Lawder and Andrea Shalal)

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FX Daily: 50bp hikes are the policy path of ‘least regret’

USD: Can we learn any FX lessons from RBNZ? The title to RBNZ’s policy release said it all: ‘Monetary tightening brought forward’. This was the type of front-loaded tightening that had been seen in the central banks of Brazil, Russia and the Czech Republic last year and is now making its way into the developed market space. The 50bp hike in rates to 1.50% was justified as a move to address the increasing risk of high inflation expectations from both externally and importantly internally-generated inflation. Pitching the ‘stitch in time ...

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European experts eye stronger growth of RMB as global currency reserve

The Chinese currency Renminbi (RMB) has been increasingly used as international currency in recent years, and it will play a more and more important role as a global currency reserve in the future, European experts have said. According to the latest data from the International Monetary Fund, in the fourth quarter of 2021, the RMB accounted for 2.79 percent of the composition of world reserve currencies. Speaking to Xinhua, Omar Rachedi, professor at the Department of Economics, Finance and Accountancy at the ESADE business school in Madrid pointed out that ...

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Investors snap up dollar on hawkish Fed views; yen slumps past 126

The Japanese yen weakened past the 126 yen per dollar mark on Wednesday for the first time since 2002 while the euro was pinned at a one-month low as investors flocked to the U.S. currency after some hawkish comments by Federal Reserve officials. Though U.S. monthly underlying inflation pressures showed some signs of moderation in Tuesday’s data, traders ramped up bets that the U.S. central bank will accelerate its monetary tightening measures this year. Also weighing on the euro was Russian President Vladimir Putin’s description of on-and-off negotiations to end ...

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