Tag: pandemic

  • The dollar is approaching pandemic levels as investors seek safety.

    The dollar is approaching pandemic levels as investors seek safety.

    #edgeforex #forex #forextrading #forexsignals #trading #yen #merchants #dollar #pandemic #levels #investors #safety #economy #cryptocurrency #bitcoin pandemic
    The dollar list is up 4% this month, while the euro, yuan, and yen have fallen as merchants bet that loan fees will rise quicker in the United States than in some other significant economy.

    On Wednesday, the dollar reached its highest level since the early days of the pandemic and was on track for its best month since 2015, boosted by the prospect of US rate hikes and safe-haven flows fueled by slowing growth in China and Europe. 

    In the Asia session, the US dollar index, which measures the greenback against a basket of six major currencies, rose to 102.39, its highest level since March 2020.

    Meanwhile, concerns about Europe’s energy security drove the euro to a five-year low of $1.0635 after Russia’s Gazprom announced a reduction in gas supplies to Poland and Bulgaria. 

    “The dollar is currently the market’s hedge, while commodities such as gold are no longer as effective,” according to Citi analysts. 

    “The dollar is a ‘quality carry,’” they continued. “The dollar also provides a higher yield than any other safe haven FX alternative.” 

    Even if the Fed stops tightening in June 2022, the US is expected to have higher rates than Europe throughout 2023, according to Deutsche Bank strategist Alan Ruskin.

    The significance of this as a driver of currency movements has only grown as uncertainty surrounds the Ukraine conflict, which is now in its third month, as well as the global consequences of China’s persistence with disruptive Covid-zero policies. 

    The Chinese yuan chilled out after a lofty downfall that seems to have been endorsed by specialists, settling at 6.5575 per dollar.

    Data also showed that China’s industrial profit growth accelerated in March. 

    Australian Bounce Later in the day, US earnings are likely to set the tone across financial markets, ahead of US growth data due on Thursday, where a strong showing could reinforce bets on rates rising sharply at the Federal Reserve’s May meeting.

    Commodity currencies have also sold recently in favour of the safety of the US dollar, bringing the New Zealand dollar close to its year-low of $0.6562. 

    The Australian dollar gained ground after consumer prices rose at the fastest annual rate in two decades, fueling speculation that interest rates could be raised from record lows as soon as next week. The Australian dollar rose as much as 0.6% to $0.7171.

    Elsewhere, the stronger dollar hampered the yen’s attempted rebound, which had received some support from safety flows and positioning for the risk of a policy shift. The yen was last trading at 127.60 per dollar, down about 0.3%.

    The Bank of Japan meets on Wednesday and Thursday, and markets anticipate some revisions to forecasts or even policy changes to try to halt the currency’s recent weakness.

    The South Korean won fell to a two-year low after North Korea pledged to increase its nuclear arsenal. 

    Sterling fell more than 2% against the dollar this week as weak retail sales data prompted a rethinking of Britain’s rate outlook, hitting a new 21-month low of $1.2560 on Wednesday. 

    Bitcoin fell to a six-week low of $38,430 on Tuesday as investors fled risky assets. 

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  • Forex News March 21, 2022

    #edgeforex #forex #trading #market #yieldcurve #bonds #recession #supply #portfolios #pandemic #cryptocurrency #bitcoin yiled curve

    Yield Curve

    • Since 2020, the yield curve has remained flat. Is the narrowing spread a sign of the coming US recession? Is the Fed still lagging behind?
    • The US 2 vs 10 year spread ended the week near 21 basis points, near the lowest levels since the pandemic began in March 2020. During the pandemic, the spread fell to an all-time low of 8 basis points.
    • The spread in 2022 reached a high of around 90 pips on January 10, but has since dipped. The rise in inflation, combined with the Fed’s reluctance to address it, gave traders the impression that the Fed was falling behind the curve.
    • Finally, the Fed would have to act, and it would have to act quickly, choking off the economy in the process.
    • The Russian/Ukraine war is certainly not helping, as inflation from the supply shock is now being pushed up by inflation from the war and its impact on commodities such as wheat and corn, as well as nickel and oil.
    • When the market expected the Fed to “up” its tightening bias to 4-5 times in 2022 last Wednesday, they went straight to 7 hikes in 2022. They now expect the rate to be 1.90 percent by the end of the year. Powell was, in fact, more Volker-like.
    • There is no doubt that recent history has bolstered people’s investment portfolios, and the scarcity of housing has sent prices skyrocketing as well. With investment accounts and home prices making consumers feel wealthy, it is believed that the economy has enough momentum to keep going.
    • Furthermore, it was thought that if the Fed could get through the rough patch and inflation DOES begin to move lower as the supply shock unclogs further and the Russian Ukraine war fizzles out, then happy days would return with rates more normalised and the balance sheet reduced.
    • The 2-10 year spread continued its downward trend, closing near its lowest level since March 2020. According to the bond market, the economy’s future may not be so bright.
    • This week, traders will be keeping an eye on the 2-10 year spread. If it continues to weaken, expect the stock market to lose its zeal as not only fears of slower growth emerge, but earnings estimates begin to fall as inflationary pressures squeeze earnings.

    Ukraine

    • Ukraine reaffirms its rejection of Russia’s offer to surrender in Mariupol
    • Ukraine’s deputy prime minister is the latest to state the country’s rejection.
    • He stated, “Of course, we did not accept these (Russian) proposals.”
    • Over the weekend, Russia demanded that troops in Mariupol lay down their weapons and surrender in exchange for allowing tens of thousands of civilians trapped in the heavily fortified city to flee safely.
    • For some context, Mariupol is a hotly contested battleground in the war because capturing it would secure a land corridor to Crimea, which Moscow annexed in 2014.

    China

    • At this time, no casualties have been reported in a Boeing plane crash involving 133 people in Guangxi, according to Chinese state media.
    • A China Eastern Airlines passenger plane is said to have crashed in Wuzhou, Guangxi. There have been reported videos and photos on social media, but this is the first official confirmation by Chinese state media. According to reports, the Boeing 737 plane was carrying 133 passengers.
    • Boeing shares are now down 6% in pre-market trading as a result of the news.
    • The flight replay is rather depressing, as the plane appears to have dropped around 30,000 in about 2 minutes.
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