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Daily Currencies Ratings

Yen tanks 1.9% after BOJ sticks to stimulus, franc climbs again

The Japanese yen fell as much as 1.9% on Friday after the Bank of Japan bucked a wave of tightening and stuck with its ultra-low interest rate stance, as currency markets looked set for another volatile session after a spate of rate hikes this week. The Swiss National Bank’s surprise decision to raise rates by 0.5% continued to reverberate through markets, with the euro losing half a percent and the franc heading back towards two-month highs hit immediately after Thursday’s announcement. Currency markets, facing the biggest run of monetary policy ...

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JPMorgan sees dollar topping 140 yen as policy diverges more

The U.S. dollar will soon rise above 140 yen as the Federal Reserve possibly gets even more hawkish on rates while the Bank of Japan digs in its heels on ultra-easy policy, according to a forecast by JPMorgan strategists. The dollar reached the highest since October 1998 at 135.60 yen on Wednesday, with markets now expecting the Fed to tighten policy by 75 basis points at a meeting later in the day and again next month, a scale of moves not seen since 1984. Meanwhile, Bank of Japan Governor Haruhiko ...

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FX Daily: Surprise hike from the SNB today?

USD: Expect dollar to remain bid on dips As James Knightley discusses in his review of the Fed meeting, the Fed looks likely to go again with a 75bp hike in July. The sharp adjustment in short-dated US yields and the dollar after Powell said that 75bp adjustments would not be common looks more a function of market positioning than any serious re-assessment of the Fed rate cycle. After all, Powell also said he wants the policy rate at 3.00-3.50% by year-end (3% is pretty high for a reserve currency) ...

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Dollar steadies as Fed relief falters

The dollar found some footing in Asia on Thursday as initial relief that the Federal Reserve did not go further than expected in hiking rates began to fade in the face of an aggressive outlook. Markets had anticipated the Fed’s 75 basis point hike on Wednesday and priced in several more after a surprisingly hot inflation reading last week. But the dollar lurched lower after Chairman Jerome Powell’s news conference, before pausing during Asia trade. It last bought a euro at $1.0440 and drew support from U.S. Treasury yields, which ...

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Euro most resilient to climate change, yuan most exposed – Barclays

Climate change could play out to the advantage of the euro, while China’s yuan and the Japanese yen are set to suffer the most without greater efforts to mitigate the effects of global warming, Barclays (LON:BARC) said in a report. The British bank mapped the effects of climate change on exchange rates, saying rising temperatures and associated economic costs could pose “rising and costly risk, with tangible FX impact”. In the bank’s most severe scenario, the euro is the outperformer, appreciating 0.5% against the dollar by 2030 and 3.9% on ...

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FX Daily: The moment of truth

USD: 75bp by the Fed today We approach FOMC day with a deeply changed picture in global markets and rate expectations compared to a week ago. Investors have now fully aligned with the view that the Fed will hike by 75bp today, following the unexpected acceleration in CPI and inflation expectations in May and media reports suggesting the option was being discussed by policymakers. While a 75bp move is not certain, we doubt such potential “leaks” to the media are a coincidence, and they do appear to us as a ...

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International use of the euro remained stable in 2021

The international role of the euro remained stable in 2021, with its share across various indicators of international currency use averaging around 19%. This was one of the main findings in the annual review of The international role of the euro published today by the European Central Bank (ECB). “Following the pandemic, the euro area has experienced one of the steepest recoveries in its history, thanks also to ample fiscal and monetary policy support. Now we face rising global inflation driven by higher energy costs, supply bottlenecks and normalising demand ...

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Euro jumps on unscheduled ECB meeting, dollar awaits Fed move

The euro jumped after the ECB’s governing council said it would hold an emergency meeting on Wednesday to discuss the recent sell-off in government bond markets, briefly distracting traders ahead of a much-watched Fed meeting. The European common currency rose as much as 0.7% against the dollar to $1.04945, following the announcement of the meeting, which comes after the spread between the yields of Germany and more indebted southern nations, particularly Italy, soared to its highest in over two years. Italy’s 10-year bond yield slid 20 basis points to 4%, ...

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FX Daily: All in on 75bp bets

USD: 75bp in the bank, now 100bp? Inflation fears continued to rock equities yesterday, sending the S&P 500 into bear market territory and generating another flight to safety in global markets. This morning, European and US stock futures are trading in the green, signalling a potential pause in the sell-off after three terrible days for risk assets. In FX, the dollar has emerged as the clear winner in the current environment, trading somewhere between 2.1% and 4.7% higher against G10 currencies compared to last Tuesday. In periods of rapidly deteriorating ...

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Dollar pauses near 20-year highs after historic bond rout

The U.S. dollar consolidated gains near a 20-year peak on Tuesday while its rivals from the Aussie to the euro nursed steep losses as traders braced for aggressive interest rate hikes from the Federal Reserve this week. Expectations for a 75 basis-point increase at the conclusion of a two-day meeting on Wednesday are nearly baked into prices, according to CME’s Fedwatch Tool with investment banks like Goldman Sachs (NYSE:GS) expecting a 75 basis-point rate hike in June and July, and a 50 basis-point rise in September. A 75 basis-point increase ...

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FX Daily: ‘More forceful’ tightening keeps risk assets pressured

USD: So much for the Fed pause As above, one is starting to hear of the need for ‘more forceful’ monetary tightening around the world now. Banxico used this phrase in May as it prepares to shift to 75bp from 50bp increment in rate hikes. The Reserve Bank of New Zealand has used the same phrase this week and the Bank of Canada governor expressed the same sentiment yesterday. We have not heard from the Federal Reserve recently because of the blackout period ahead of next week’s FOMC meeting, but ...

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Japanese yen jumps after authorities sound intervention warning

The Japanese yen jumped on Friday after the government and the central bank in a rare joint statement expressed concern about the yen’s recent slide to hit two-decade lows. After a meeting with his Bank of Japan (BOJ) counterpart, the country’s top currency diplomat Masato Kanda told reporters that Tokyo will take appropriate action as needed, a sign Japan may be edging closer to intervening in the market in a bid to arrest the yen’s declines. Japan’s yen has been battered by traders wagering that the BOJ will stick with ...

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IMF says yen’s recent ‘significant’ fall reflects fundamentals

The yen’s recent “significant” depreciation reflects fundamentals, such as market expectations of differing monetary policy paths between Japan and the United States, a senior International Monetary Fund (IMF) official said on Thursday (Jun 9). Ranil Salgado, the IMF’s Japan mission chief, said the yen’s recent moves against the dollar had been strongly correlated with Japan-US interest-rate differentials. Rising global raw material prices had also weighed on the yen, because Japan, a major commodity importer, must pay more dollars, he said. “We believe that the yen’s movements reflect fundamentals,” Salgado told ...

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ECB hawkishness not enough to lift the euro right now

The positive reaction in EUR/USD after the ECB signalled openness to a 50bp rate hike in September (while formally announcing a 25bp one in July) was exceptionally short-lived. Probably, a key reason behind the reversal of the EUR/USD spike during President Lagarde’s press conference has been the underperformance of other assets the EUR tends to be linked to in the short term. The 10-year BTP-Bund spread has widened by approximately 15bp since the announcement, and eurozone equities are underperforming US ones by around 1.20% today. Incidentally, the market’s general sentiment ...

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FX Daily: Talking up the euro

USD: Biding its time near the highs There is a complex layer of stories at play in FX markets at present. Risk assets have temporarily stabilised and US activity data is holding up such that investors remain happy to price a Fed terminal rate up at 3.25% next year. This is keeping the dollar generally strong. Yet, the hawkish turn from the European Central Bank and others over the last month has provided some support to European currencies – even though those currencies are challenged by surging energy prices on ...

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