Daily Market Update

U.S. Dollar back to green territory post-Biden easing

June 17, 2022

The U.S. Dollar is trading in more favorable ranges once again, likely closing the week with a small half percent gain following the up-down nature of the current uncertain market. 

Overview

With other central banks also meeting as after the Fed, it is clear that there is a debate about which course of action to take long-term, with China and Japan looking to stimulate more while the U.S., U.K., and even Europe look to contract. The buck benefits in ties of chaos, but the amount of downside risk items at the moment does seem t be overwhelming all of those having to forecast clear outlooks.President Joe Biden addressed the sour national mood in an interview with the Associated Press and approved action to lower overseas shipping costs to try to fight inflation from an executive position. Inflation keeps on inflicting pain on all Americans, and it is having more than just bad political effects.

For now, it seems this has boosted the buck after the rout from yesterday, but again, the roller-coaster ride we are on tends to even things out when compared to a basket of majors peers. European equities also improved during their trading session, but Euro failed to sustain its jump from yesterday.

 

What to Watch Today…

  • No major economic events are scheduled for today

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JPY

The Japanese Yen has been jumping all over the place as higher yields elsewhere have sunk the Yen to 20+-year lows. More importantly, the Bank of Japan announced that they are indeed most committed to an ultra-loose monetary policy to keep things accommodative. The debate among investors is about whether we can overcome recessionary pressures or be doomed, while central banks are differing in how they feel their role can impact the nature of those record-high price increases.

The disparity is such that now CHF/JPY pair has the lowest valued Yen since 1980 following the Swiss National Bank’s Thursday surprise to promise tightening and higher interest rates.

 

EUR

The Euro has fallen by close to half a percent thus far for the week following a rally yesterday that could not last following President Joe Biden’s pledge to do more to help the U.S. economy. Despite the downward move, the Euro could see another round of gains following reassurances from European Central Bank President Christine Lagarde.

Each member nation of the Euro-zone has bonds and its own debt-to-GDP ratios, so the ECB head explained that those more indebted countries will not see their borrowing costs blow out of control. We shall see if Euro improves also based on the tightening to come from the ECB. They will next meet on July 21st.

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