The dollar showed moderate gains against major world currencies Monday morning.
The ICE-calculated index, which shows the U.S. dollar against six currencies (euro, Swiss franc, yen, Canadian dollar, pound sterling and Swedish krona), is up about 0.1%. The broader WSJ Dollar Index is up 0.2%.
The euro/dollar pair is trading at $0.9950 by 7:45 a.m. Q, versus $0.9960 at the close of last Friday’s session, the euro is losing about 0.1%.
The dollar/yen is up 0.3% at 147.08 yen from 146.62 yen at the end of last week.
The pound is trading at $1.1333, up from $1.1377 at the close of the previous session.
Currency traders continue to try to predict the future trajectory of Federal Reserve interest rates. Currently, the market generally expects the Fed to slow the rate hike in December and raise it by 50 basis points after raising it by 75 bps at four previous meetings, Trading Economics writes.
In addition, market participants are waiting for data on October inflation in the U.S., which may affect the Fed’s decision. The report will be released Thursday, and analysts polled by Trading Economics on average expect it to point to a slowdown in inflation in October to 8% from September’s 8.2%.
Meanwhile, the mainland yuan is down 0.4% to 7.2119 per $1, and the offshore yuan, which is traded in Hong Kong, is down 0.54% to 7.2154 per $1.
The Wall Street Journal wrote last Friday, citing several sources, that Zeng Guang, a former top epidemiologist at China’s Center for Disease Control and Prevention, said during a conference that a major change in the country’s approach to the coronavirus pandemic was expected in 2023.
Over the weekend, however, Beijing reiterated its intention to adhere “rigorously” to a “zero tolerance” policy for COVID-19.
“Previous practices have shown that our prevention and control plans, as well as a series of strategic measures, have been absolutely correct,” Bloomberg quoted CDCP official Hu Xiang as saying.
Since October 21, Ukrainians have opened 2.5 thousand deposits with the purchase of dollars at the official rate of the National Bank of Ukraine (NBU) for a period of 6 months, followed by the mandatory sale also at the official rate, the NBU press service reported on Friday.
According to the release, the average deposit amount is $3.6 thousand, and the total amount attracted as of November 1 on such deposits amounted to $9 million.
“The NBU does not have targets for attracting such deposits by banks. Our goal is to stabilize and improve exchange rate expectations, reduce pressure on the hryvnia cash exchange rate and protect international reserves,” the press service of the head of the monetary policy department of the department of monetary policy and economic analysis of the National Bank Mikhail Rebrika.
As reported, since October 21, the NBU, in cooperation with banks, has allowed individuals to buy US dollars at the official NBU rate, followed by their placement on a fixed-term deposit in a bank and the mandatory resale of the purchased currency upon the expiration of the deposit at the official rate.
According to the report, the amount and number of such deposits for one client of the bank are not limited, and the interest rate on the deposit will be set in accordance with the interest rate policy of banks, the deposit term is from six months with the possibility of prolongation, but without the right of early termination.
Earlier, from July 21, the National Bank allowed the purchase of non-cash currency at commercial rates to place it on deposit for at least three months, but without the obligation to sell such currency upon completion of the deposit. At the same time, the volume of such deposits was initially limited to UAH 50,000, and recently the ceiling was raised to UAH 100,000 per month.
The US dollar is depreciating against the euro, yen and pound sterling in trading on Wednesday, the market awaits the results of a two-day meeting of the Federal Reserve System (Fed).
Traders have no doubt that the rate will be increased by 75 bp following the November meeting. for the fourth time in a row, and their focus is on statements by Fed Chairman Jerome Powell on the further pace of policy tightening.
Signals of persistent inflationary pressures require the US Central Bank to continue to raise rates, but some of its leaders have already made it clear that they consider it necessary to slow down the rate of increase and assess the economic consequences of earlier measures, The Wall Street Journal notes.
Many economists warn of the risks of the Fed tightening too much, which could trigger a severe economic downturn.
“The Fed will have to think about policy adjustments at the November meeting. They are trying to ‘cool’ the economy, not lead it to a deep freeze,” said KPMG chief economist Diane Swank, quoted by the WSJ.
Experts polled by Bloomberg expect the Fed to slow down the rate hike in December to 50 bp, after which it will raise it two more times by 25 bp. at the beginning of 2023.
The ICE-calculated index, which shows the dynamics of the dollar against six currencies (the euro, the Swiss franc, the yen, the Canadian dollar, the pound sterling and the Swedish krona), is losing 0.2% on Wednesday, the broader WSJ Dollar – 0.24%.
The euro/dollar pair is trading at $0.9893 at 9:00 AM, compared to $0.9874 at the market close on Tuesday.
The US dollar against the yen fell to 147.52 yen against 148.24 yen in the previous session.
The pound rose to $1.1510 from $1.1482 on Tuesday.
The Bank of England is also holding a meeting this week, its results will be made public on 3 November. Experts expect the British Central Bank to raise the base rate by 75 bp. – until 3%. The Bank of England did not raise the rate by more than 50 bp. since 1989, notes FT.
The US dollar strengthens against the euro, yen and pound sterling in trading on Monday.
The market is waiting for the meeting of the Federal Reserve System (Fed), which will be held on November 1-2. Traders are confident that the US Central Bank will raise the base interest rate by 75 basis points (bp) following the results of the fourth meeting in a row. As a result, the rate will reach the level of 3.75-4% – the maximum since December 2007.
Traders will be closely watching Fed Chairman Jerome Powell’s statements to see if the US central bank intends to slow down the pace of policy tightening from December, writes the Financial Times newspaper. The global economy is weakening, and experts are already seeing signs that the peak of inflation in the United States has passed. In this regard, investors are increasingly expressing fears that the Fed may overdo it with raising rates and provoke an excessive recession in the economy.
The ICE-calculated index, which shows the dynamics of the dollar against six currencies (the euro, the Swiss franc, the yen, the Canadian dollar, the pound sterling and the Swedish krona), adds 0.08% on Monday, the broader WSJ Dollar – 0.19%.
The euro/dollar pair is trading at $0.9946 as of 8:55 am KSK, compared to $0.9966 at market close on Friday.
The US dollar against the yen rose to 147.92 yen against 147.48 yen in the previous session.
The pound dropped to $1.1592 from $1.1617 on Friday.
The Bank of England is also holding a meeting this week, its results will be made public on 3 November. Experts expect the British Central Bank to raise the base rate by 75 bp. – until 3%. The Bank of England did not raise the rate by more than 50 bp. since 1989, notes FT.
The dollar against the yuan edged up to 7.2698 yuan from 7.2525 yuan at market close on Friday amid weak economic data from China.
The Purchasing Managers’ Index (PMI) for China’s manufacturing industry fell to its lowest level since July of 49.2 in October from 50.1 a month earlier, according to data from the National Bureau of Statistics of the People’s Republic of China (GSO). An index value below 50 points indicates a decline in activity in the sector.
PMI services in China in October fell to 48.7 points, dropping below 50 points for the first time since May.
The dollar exchange rate on Thursday morning changes slightly against the euro and the pound, while the US currency is sharply declining against the yen.
The euro/dollar pair is trading at $1.0076 by 8:57 sq.m. against $1.0086 at the close of the session on Wednesday, the euro is losing about 0.1%.
The pound is trading at $1.1625 compared to $1.1628 at the close of the previous session.
The dollar fell 0.8% against the yen to 145.27 yen compared to 146.39 yen the day before. Earlier this month, the yen fell to its lowest level since 1990.
The ICE-calculated index, which shows the performance of the US dollar against six currencies (the euro, the Swiss franc, the yen, the Canadian dollar, the pound sterling and the Swedish krona), is down about 0.1%. Over the past two sessions, the indicator fell by 2% and dropped to a month low.
The main reason for the fall of the dollar this week was the expectation that the Federal Reserve may slow down the pace of raising the key rate as inflation eases and problems in the US economy, writes Trading Economics.
Analysts, on average, expect the Fed to raise rates by 75 basis points in November and expect a 50 bp hike in December.
Also, market participants are waiting for the results of the meetings of the European Central Bank and the Bank of Japan, which will end this week.
The ECB is expected to raise key interest rates again on Thursday by 75 bp. The European Central Bank is constrained from refusing to raise interest rates in the near term as consumer price growth in the euro area is likely to have not peaked yet, BlueBay Asset Management chief investment officer Mark Dowding said in an interview with Dow Jones.
Meanwhile, the Bank of Japan on Friday, most likely, will not change the main parameters of its monetary policy.
The US dollar is weakly strengthening against the euro at auction on Monday, depreciating against the pound sterling.
The yen against the dollar, which jumped at the beginning of the session, again moved to the decline.
The ICE-calculated index showing the dynamics of the dollar against six currencies (the euro, the Swiss franc, the yen, the Canadian dollar, the pound sterling and the Swedish krona) adds less than 0.1%, the broader WSJ Dollar Index – 0.25%.
The euro/dollar pair is trading at $0.9855 as of 9:15 p.m. compared to $0.9864 at the market close on Friday
The pound sterling has risen in price by this time to $1.1375 in comparison with $1.1304 following the results of the previous auctions. The pound strengthens after the refusal of former British Prime Minister Boris Johnson to fight for the post of leader of the Conservative Party and, accordingly, the head of the British government.
This gives ex-Finance Minister Rishi Sunak a good chance of winning, the Financial Times notes.
The dollar/yen pair was trading at 148.93 yen as of 9:15 a.m. versus 147.68 yen at market close on Friday. At the beginning of the session, the dollar fell to 145.53 yen, but then again turned to growth.
On Friday, the US currency fell 0.72% against the yen, which the Nikkei newspaper attributed to the intervention of the Japanese authorities in the foreign exchange market.
Japan’s Finance Minister Shun’ichi Suzuki said on Monday that the Japanese government would take the necessary measures to prevent “excessive exchange rate fluctuations.”
He declined to say whether there were interventions on Friday and Monday.
The dollar against the yen on Friday rose to 151.94 yen – the highest since July 1990.
The dollar against the yuan edged up to 7.2535 yuan from 7.2438 yuan despite stronger than expected Chinese GDP data.
China’s GDP in the third quarter increased by 3.9% in annual terms after rising by 0.4% in April-June. The consensus forecast of experts polled by Trading Economics called for growth of 3.4%.
