He global dollar is headed for its biggest monthly rise in two and a half years, and remains near three-month highs ahead of a series of employment and inflation data in USA that could determine the path for Federal Reserve (Fed) regarding its monetary policy; and at the same time that the ruling coalition in Japan lost the parliamentary majority, sinking the yen.
He dollar index —which measures the performance of the greenback in relation to a basket of six other internationally relevant currencies— rose 0.02% this Tuesday and has accumulated an increase of 3.6% so far in October, marking its best monthly performance from April 2022.
This year it has risen against all major currencies except the pound. In front of yen, In particular, it hit three-month highs against the yen on Tuesday as Japan’s ruling coalition’s loss of a parliamentary majority in weekend elections clouded the political and monetary landscape.
On the other hand, recent data has highlighted the resilience of the US economy, which, together with growing market bets on a victory for the Republican candidate donald trump in next week’s US presidential elections, have shored up the dollar and have raised Treasury bond yields.
“I still think that the currency market is only thinking about one operation at the moment, which is a strong dollar,” said the research director of XTB, Kathleen Brooks, in dialogue with Reuters.
A week with economic data
Likewise, this week new economic data will be published that will be key to determining what will happen to interest rates in November. The list includes the basic personal consumption expenditure price index of September in the United States – the Fed’s preferred measure of inflation – due to be published on Thursday, as well as an avalanche of jobs reports.
With the dollar unlikely to move much from its recent highs, other currencies came under pressure, most notably the yen, which has fallen to its lowest level since July after Sunday’s Japanese election left it in flux. the composition of the future government.
“Overall, the risks appear to be skewed towards more flexible fiscal policy than otherwise under the new government,” he told Reuters. Carol Kong, foreign exchange strategist Commonwealth Bank of Australia. “Greater financial market volatility could also encourage the Bank of Japan to keep its policy interest rate unchanged for longer than we currently expect,” he added.
The yen has lost almost 10% in value since September’s 14-month high against the dollar. Meanwhile, the dollar rose 0.12% on the day and stood at 153.47 yen.
Source: Ambito
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