USD/CHF rebounds but will it last?
“Xi’an, the city of 13 million residence enters into lockdown.” Market demand for greenback was invigorated as recession fears send investors scavenging for safe-haven assets. According to reports, Xi’an entered a seven-day period of lockdown after 18 coronavirus cases were reported in the city. Public entertainment venue such as pubs, internet cafes and karaoke will shutdown on Wednesday’s midnight. The abrupt announcement sparked speculation for similar measure to be announced
Bank of Canada may deliver huge rate hike, USDCAD dips.
“According to Bank of Canada, inflation is viewed as being more pervasive.” Recently, Bank of Canada announced that consumer expectations for inflation have risen, alongside with concern towards price of food, gas, and rental. In a separate survey, BoC reported that businesses in Canada expects inflation to linger at higher level for longer-term and many is planning to pass the cost onto consumers. Rising expectation for higher inflation condition in Canada reinforces the market to
GBPJPY towed down as risk aversion soars.
“Fears of economic slowdown in UK push waves of risk-aversion in the market.” GBP/JPY oscillates near intraday low of 163.00 as investors shies away due to rising political and economic risk. The Telegraph reported that Conservative Party may reattempt to oust UK Prime Minister by overhauling laws to trigger leadership challenge immediately. On the other hand, latest survey shows that 54% of 5,700 companies in UK expects increased business turnover for the next 12 months. The result is
USDJPY cooled, buying the dip is the way ahead?
“US dollar cooled following PCE release, focus shifted to risky assets temporarily.” Greenback consolidates with largest daily loss in two weeks as recent data spur recession fear among traders. According to Bureau of Economic Analysis, Core PCE Price Index for May came in at 0.3%, slightly lower than forecast of 0.4%. The report highlights slight depreciation in terms of consumption, which may be due to stubbornly high inflation and expectation for higher interest rates from Fed.
Fed deliver hawks, greenback stood tall.
“Fed is committed to use its tools to dial down inflation to 2%.” Dollar bulls marched substantially as Federal Reserve re-emphasized their commitment to quell inflation by raising interest rates. During the European Central Bank panel session, Fed Chair Jerome Powell commented that the US economy is well positioned to withstand negative impact from tighter monetary policy. While Powell agreed that tightening may gone too far, he emphasized that Fed’s commitment is to restore price
EURJPY clings on, new high soon?
“ECB President Christine Lagarde failed to offer fresh insights with regards to policy outlook.” EURJPY remain restricted near double top’s peak after European Central Bank failed to offer any new insights. As of today, ECB is widely expected to follow the footsteps of its peers by raising interest rates in July to combat soaring inflation. While the central bank would tighten gradually, ECB President Christine Lagarde emphasized that they will act decisively in the event of
USDCHF softens, may possibly extend its bearishness.
“Dollar bulls wane as focus shifted towards other risky assets.” US dollar slipped during Asian trading session as traders seek higher yields from other risky assets. Prior, Federal Reserve have made it clear to tighten monetary policy at a faster pace to control rising inflation. As the market has fully digested the fact, in addition to lack of important data from the US, the limelight has shifted to other currencies such as Aussie dollar and Swiss Franc. Quick recap on
Recession fear subside, greenback follow suit.
“Bullard says recession fears are premature.” Greenback eases from the top, trimming some of its gains from last week as recession fears abate. Last Friday, St Louis Federal Reserve President James Bullard commented that recession fears are over exaggerated as the US economy is still buoyant. In addition, Bullard expressed that aggressive response via policy tightening is the best way to address high inflation before its too late. Following his remarks, traders shifted their attention
USDCHF at three weeks low, bulls looking to defend the pair.
“Powell delivers a rather contradicting element which disappoints traders.” US dollar appears choppy as market sentiment gets tangled up following testimony from Fed Chair Jerome Powell. Powell cited that they are going all out to control rising inflation in the country. However, he emphasized that the Fed may induce recession due to hastened tightening. His testimony came as US releases downbeat data for both Manufacturing and Services PMI, dragging market sentiment even
AUDUSD fumbles, could it be saved?
“Recession fear induce higher demand for safe-haven.” AUD/USD pared its gains, touching fresh weekly low of 0.6880 after Fed Chair Jerome Powell’s testimony in front of US Senate. During the session, Powell reemphasized that they are committed to bring down inflation. While pace of tightening would depend on upcoming data, he also acknowledged for the first time that their action might tip US into a recession. Likewise, dire economic data from China has further dialled down market
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