Currencies in the world are strengthening and overshadowing the dollar. How does the global context and the rate policy in the US affect this trend?
He Euro, sterling set for weekly gains against dollar this Friday, November 3 as the US-led rally in global bonds drives yields lower. In this context, the US currency weakens and that means a relief for other currenciesabove all, for the japanese yenwhich comes very beaten.
However, the publication of non-farm payrolls, scheduled for today, which is the most important data of the week, could completely change the situation. Analysts believe that Jobs likely increased by 180,000 in Octoberslowing from 336,000 in September, in part due to United Auto Workers (UAW) strikes against Detroit’s “Big Three” automakers, which depressed manufacturing payrolls.
He euro up 0.1% to $1.0632 and, thanks to gains earlier in the week, was on track for a weekly advance of 0.63%. For its part, the pound sterling It was trading unchanged at $1.2193 and headed for a weekly gain of 0.61%.
Fed policy and the dollar
The fall of the dollar, after a strong recent rally – the dollar index is on track to fall 0.4% for the week, its third week of losses in the last 16 – reflects a decline in bond yields in the United States. The 10-year US Treasury yield is headed for a weekly drop of 17 basis points, the biggest in a week since July.
That fall was caused by a combination US Treasury Department announcing smaller-than-expected increases in debt supply longer term, and Federal Reserve Chairman Jerome Powell appearing more confident in suggesting that the Fed is done raising interest rates in his press conference after its meeting on Wednesday.
What’s coming
According to CME’s FedWatch tool, markets now value the possibility of a rate hike at less than 20% in December, compared to 39% at the beginning of the week, despite the fact that the Fed officially left the door open to a new increase in borrowing costs, in a nod to the resilience of the economy.
On Thursday, the Bank of England It joined other major central banks in keeping interest rates stable and, although it stressed that it did not expect to start cutting them anytime soon, this added fresh impetus to the bond rally.
He and in appreciated a little on Friday, to 150.3 units per dollar, after a week in which it hit lows in one year against the dollar and in 15 years against the euro on Tuesday, after the Bank of Japan modified its policy of control of the yield curve.
Source: Ambito
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