Dollar Weakens As Fed Seen Slowing Down On Rate Hikes

RTTNews | 996 dias atrás
Dollar Weakens As Fed Seen Slowing Down On Rate Hikes

(RTTNews) - Currency markets were sober in the week January 23-27 amidst an anxious wait to the interest rate reviews by the Federal Reserve, Bank of England, European Central Bank and Reserve Bank of Australia due in the first week of February. Holidays in key Asian markets also influenced both sentiment and volumes.

Currency market movements during the week mostly hovered around the economic data releases and central bank news. Inflation reading for fourth quarter from Australia came in at 7.8 percent, higher than the expectations of 7.5 percent. As expected, Bank of Canada raised rates by 0.25 percent but surprised markets with a signaling of a pause, becoming the first major central bank to do so, in this hiking cycle. GDP readings for the fourth quarter from the U.S. also threw a surprise reading of 2.9 percent, higher than the 2.6 percent that the markets were expecting. Finally, at the end of the week, data showed the Fed-preferred core PCE inflation dropping to an over one-year low of 4.4 percent, providing the Fed with sufficient headroom to ease its monetary policy. Personal spending in the U.S. also declined 0.2 percent versus expectations of a 0.1 percent decline, implying a slowing down in the economy.

The U.S. dollar weakened against the Euro, British pound and the Australian dollar but strengthened against the Japanese yen. The Dollar Index (DXY), which measures the U.S. dollar's strength against a basket of 6 currencies viz, Euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc declined from 102.01 on January 20 to 101.93 by January 27. DXY ranged between the high of 102.43 touched on Tuesday and the eight-month low of 101.50 touched on Thursday.

The U.S. dollar weakened against the euro during the course of the past week, supported by hawkish comments from the ECB. The EUR/USD pair which was at 1.0855 at the close of the previous week strengthened to 1.0867 by the end of the recent week. The pair touched a nine-month high of 1.0930 during the week. The low point for the week was 1.0834 touched on January 24.

The U.S. dollar weakened against the pound as well, with the GBP/USD pair edging up to 1.2397 by January 27, from the level of 1.2393 at the end of the previous week. The pound traded between a high of $1.2450 and a low of $1.2262 during the course of the week amidst expectations that the Bank of England would have to continue to be aggressive on rate hikes to tame the sticky inflation.

The higher-than-expected inflation readings in Australia lifted the Australian Dollar upon fears that the Reserve Bank of Australia would have to increase rates further to tame the persistent inflation. RBA's next interest rate decision is due on February 6. Sentiment was also buoyed by the reopening of the Chinese economy. The AUD/USD pair increased to 0.7103, from 0.6966 over the course of the past week. The pair ranged between a high of 0.7143 and a low of 0.6954 during the week.

The Bank of Japan's continuing easy monetary stance dragged the Japan yen lower. The USD/JPY pair increased from 129.57 on January 20 to 129.85 by January 27. The weekly trading range was between 131.12 and 129.02. Bank of Japan's next interest rate decision is due on March 9. Impending monetary policy decisions by the Federal Reserve, Bank of England and the European Central Bank as well as the accompanying commentary would shape the currency market's trajectory over the course of this week.

The Fed is expected to raise rates by 25 basis points or even lower, whereas the ECB and BoE are seen handing down 50 basis-points hike. Based on current market expectations, the DXY is at 101.90, the EUR/USD is at 1.0884, GBP/USD is at 1.2373, AUD/USD is at 0.7071 and USD/JPY is at 130.22.

read more
Japanese Market Sharply Lower

Japanese Market Sharply Lower

The Japanese market is sharply lower on Thursday, extending the losses in the previous session, following the broadly negative cues from Wall Street overnight. The Nikkei 225 is falling well below the 48,700 level, with weakness across most sectors led by index heavyweights and technology stocks.
RTTNews | 53 minutos atrás
Indonesia Stock Market May Extend Wednesday's Losses

Indonesia Stock Market May Extend Wednesday's Losses

The Indonesia stock market on Wednesday snapped the two-day winning streak in which it had jumped more than 310 points or 3.9 percent along the way. The Jakarta Composite Index now rests just above the 8,150-point plateau and it's likely to open in the red again on Thursday.
RTTNews | 56 minutos atrás
Lower Open Predicted For Hong Kong Stock Market

Lower Open Predicted For Hong Kong Stock Market

The Hong Kong stock market on Wednesday ended the two-day winning streak in which it had picked up more than 775 points or 2.8 percent. The Hang Seng Index now rests just above the 25,780-point plateau and it's looking at another soft start again on Thursday.
RTTNews | 1h 11min atrás
Australian Market Modestly Lower

Australian Market Modestly Lower

The Australian market is trading modestly lower on Thursday, adding to the losses in the previous two sessions following the broadly negative cues from Wall Street overnight. The benchmark S&P/ASX 200 is falling to near the 9,000 mark, with weakness in iron ore miners, financial and technology stocks partially offset by gains in gold miners and energy stocks.
RTTNews | 1h 23min atrás
China Bourse May Extend Wednesday's Losses

China Bourse May Extend Wednesday's Losses

The China stock market on Wednesday ended the two-day winning streak in which it had advanced more than 75 points or 1.9 percent. The Shanghai Composite Index now sits beneath the 3,915-point plateau and the losses may accelerate on Thursday.
RTTNews | 1h 26min atrás
More Pain Predicted For Taiwan Stock Market

More Pain Predicted For Taiwan Stock Market

The Taiwan stock market on Wednesday wrote a finish to the two-day winning streak in which it had collected more than 450 points or 1.7 percent. The Taiwan Stock Exchange now sits just beneath the 27,650-point plateau and it's expected to open under pressure again on Thursday.
RTTNews | 1h 56min atrás
Rally May Stall For Singapore Stock Market

Rally May Stall For Singapore Stock Market

The Singapore stock market has moved higher in back-to-back sessions, collecting more than 65 points or 1.5 percent along the way. The Straits Times Index now rests just above the 4,390-point plateau although it may run out of steam on Thursday.
RTTNews | 2h 26min atrás
Malaysia Bourse May Give Up Support At 1,600 Points

Malaysia Bourse May Give Up Support At 1,600 Points

The Malaysia stock market has finished lower in two of three trading days since the end of the two-day winning streak in which it had picked up less than a point. The Kuala Lumpur Composite Index now sits just above the 1,600-point plateau and it's likely to extend its losses on Thursday.
RTTNews | 2h 56min atrás