A public holiday today Stateside provides welcome relieft for the Greenback. The USD has been confirmed as the worst performing G10 currency in the first 6 months of the year according to Rabobank and is threatening to continue its poor performance into the back end of 2017.
Prima facie, one may place the blame on the Dollar decline solely with President Trump however looking at the hard data the economy simply hasn’t picked up as much as intially expected.
Central to this is the now increased market scepticism as to weather the Fed willl be able to announce a third rate hike by the end of the year.
Reversal out of long USD positions is also a function of an improvement in European fundamentals [i.e. political risk] which have driven money back accross the Atlantic. This has seen EUR trade to its highest since May 2016 against the Dollar and is predicted to end the year at 1.1700.
Australia With a 25 bp increase in interest rates, the Reserve Bank of Australia took interest rates to an 11 year high of 4.1% and with that increase took the total increase since May 2022 to 4% which is the most aggressive rate tightening cycle ever. This was not expected and consequently had a disproportionate […]
Canadian Curveball Canada was one of the first movers globally to raise interest rates in the face of rising inflation. Whilst much of the rest of the world, including the US, the Eurozone and the UK were still sitting on their hands claiming inflation would be transitory, Canada was busy hiking rates. The nature of […]
US rate cuts Much of the momentum for EURUSD trading above 1.10 only a few weeks ago was built upon expectations of rate cuts by year end at the Federal Reserve. Whilst constantly changing, that view is under threat currently, with markets pricing stickier rate expectations than they previously had been. The Fed is still […]