A rapidly appreciating US Dollar has sent shockwaves through a previously tranquil market. The extenuation of an extant rally within the Dollar has been precipitated by the intensification of a trade war between the US, China and increasingly Russia. Coupled with a sustained and considerable tightening of monetary policy, with increasingly hawkish comments coming in from governmental officials, the trade war has been intense enough in order to propel the Dollar below the psychological levels of 1.28 against the Pound and even 1.15 against the Euro. Alongside the breaches of numerous psychological levels, the Dollar has also caught enough of a bid to propel it through numerous strong technical resistance levels. The Euro has seen idiosyncratic risk injected from the fiscal negotiations in Italy. Whilst Italian bond yields have taken a goliath wallop, the Euro has remained moderately unscathed. Overnight, traders have begun to price in the risk presented by the exposure of European banks to the tumult in Tukey, facilitating the unprecedented fall in the EURUSD cross. Concomitant with the pressure mounting behind the Lira, emerging market currencies have sold off in force. In particular, the performance of the Rand has been poor, breaking through 14 against the Dollar and briefly 18 against the Pound.
Discussion and Analysis by Charles Porter
Click Here to Subscribe to the SGM-FX Newsletter
Onto June A slew of strong US economic data over recent weeks had boosted expectations for how the culmination of the Fed’s two-day meeting would be presented to the public last night. The story goes back further. The narrative dominant in late-2023 of a US economy in need of restrictive monetary policy was unavoidable. The […]
Germany and the EU The Germany Supply Chain Act came into force in 2023 as a result of Germans wanting to do something good for employees in other countries in particular with respect to human rights and environmental issues. So far so good. But a combination of cost and bureaucracy overlaid with the difficulty of […]
Emergency Stop In the early hours of trading on Monday morning, sudden and significant buying pressure within USDJPY has markets wondering: is this the signal that local authorities are taking another stab at active market intervention? In a critical week for FX, with central bank decisions and a slew of top-level economic data from across […]