US Dollar rallies in flight for safety out of Europe’s political turmoil

Fonte Fxstreet
14/06/2024 10:34
  • The US Dollar trades firmly in the green while the Japanese Yen and the Euro weaken. 
  • The BoJ said it is set to ease its bond-buying program, while European sovereign bond yields increase due to political uncertainty in France.. 
  • The US Dollar index trades above 105.50 and could head towards year-to-date highs.

The US Dollar (USD) rallies on Friday as traders flee out of the Japanese Yen (JPY) and the Euro (EUR). The renewed strength in the Greenback comes as sovereign bond yields in some countries in the Eurozone, particularly France, are spiking on the back of political uncertainty. In Asia, the weaker Japanese Yen is the result of the Bank of Japan (BoJ) monetary policy meeting, which concluded with Governor Kazuo Ueda’s announcement that the bank is set to relax its bond-buying program. 

On the economic data front, markets seem to be ignoring the recent soft inflation figures and focusing on a still hawkish Federal Reserve (Fed). On Friday, the calendar offers import-export data price data and the University of Michigan Consumer Sentiment and Inflation Expectations survey. Federal Reserve Bank of Chicago President Austan Goolsbee and Federal Reserve Governor Lisa Cook will drop some comments during the US session. 

Daily digest market movers: Gaining without doing anything

  • Two non-USD drivers triggered ample US Dollar strength across the board on Friday:the Eurozone bond crunch – with sovereign yields rising in countries like Italy and France – and the outcome of the Bank of Japan monetary policy meeting. 
  • The USD/JPY pair climbs back to nearly 158.00 after the BoJ announced it will ease its bond-buying program. This might trigger a freefall in bond prices and a rise in yields, triggering further Yen weakness. 
  • At 12:30 GMT, US Import and Export prices for May will be released. Monthly Import prices are expected to rise 0.1%, down from the 0.9% increase seen in April. Monthly Export prices should stabilize following the 0.5% increase a month earlier.
  • At 14:00 GMT, the University of Michigan will release its preliminary report for June:
    • Consumer Sentiment is expected to jump back to 72.0 from 69.1.
    • The five-year inflation expectations rate stood at 3% at the end of April. 
  • Near 18:00 GMT, Federal Reserve Bank of Chicago President Austan Goolsbee participates in a fireside chat at the Iowa Farm Bureau Economic Summit.
  • At 23:00 GMT, Federal Reserve Governor Lisa Cook delivers a speech at the 50 Years celebration of the American Economic Association Summer Program in Washington D.C.
  • Equity markets are painting a similar pattern compared to the last few trading sessions, with European equities in the red and US futures holding onto gains. 
  • The CME FedWatch Tool shows a 31.5% chance of Fed interest rate remaining at the current level in September. Odds for a 25-basis-points rate cut stand at 60.5%, while a very slim 7.9% chance is priced in for a 50-basis-points rate cut.
  • The benchmark 10-year US Treasury Note slides to the lowest level for this month, near 4.22%, flirting with the lows seen in March. 

US Dollar Index Technical Analysis: With a little help from my friends

The US Dollar Index (DXY) is getting help from both the Japanese Yen and the Euro this Friday. With both currencies accounting for nearly 70% of the basket forming the US Dollar Index, when both weaken, the Greenback gains without doing anything. With still a few weeks to go before the French elections and the BoJ taking it very slowly, the Greenback could get some further support in the coming weeks. 

On the upside, no big changes to the levels traders need to watch out for. The first is 105.52 where the DXY is trading around at this moment, a level that held during most of April. The next level to watch is 105.88, which triggered a rejection at the start of May and will likely play its role as resistance again. Further up, the biggest challenge remains at 106.51, the year-to-date high from April 16. 

On the downside, the trifecta of Simple Moving Averages (SMA) is still playing support. First is the 55-day SMA at 105.07. A touch lower, near 104.48, both the 100-day and the 200-day SMA are forming a double layer of protection to support any declines. Should this area be broken, look for 104.00 to salvage the situation. 

US Dollar FAQs

The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.

The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.

In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.

Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.

 

Isenção de responsabilidade: Apenas para fins informativos. O desempenho passado não é indicativo de resultados futuros.
placeholder
Qual será o impacto do IPC de julho dos EUA sobre as ações dos EUA e o dólar?Nesta quinta-feira, os Estados Unidos divulgarão os dados do IPC de julho. As expectativas do mercado sugerem que o IPC anual de julho aumentará de 3% do mês anterior para 3,3%, enquanto o núcleo do IPC deverá aumentar 4,8% em relação ao ano anterior, permanecendo inalterado em relação à leitura anterior. Se os dados excederem as expectativas, isso poderá exercer uma pressão de baixa sobre as ações dos EUA e beneficiar o dólar americano.
Autor  Mitrade Team
Nesta quinta-feira, os Estados Unidos divulgarão os dados do IPC de julho. As expectativas do mercado sugerem que o IPC anual de julho aumentará de 3% do mês anterior para 3,3%, enquanto o núcleo do IPC deverá aumentar 4,8% em relação ao ano anterior, permanecendo inalterado em relação à leitura anterior. Se os dados excederem as expectativas, isso poderá exercer uma pressão de baixa sobre as ações dos EUA e beneficiar o dólar americano.
placeholder
O fundador da Cardano afirma que a ADA superará o BTC e o ETH: gabar-se vazia ou possibilidade real? Charles Hoskinson ameaçou superar o BTC e o ETH, mas o ADA está muito atrás em termos de valor de mercado e TVL, e não pode ser comparado a ele.
Autor  Mitrade Team
Charles Hoskinson ameaçou superar o BTC e o ETH, mas o ADA está muito atrás em termos de valor de mercado e TVL, e não pode ser comparado a ele.
placeholder
USD/JPY rompe os 150! Foco na reunião da taxa de juros do BOJ nesta semanaAcreditamos que existe a possibilidade de ajustar a política de Controle da Curva de Rendimento (YCC). Entretanto, se o Banco do Japão mantiver sua postura atual, é provável que o iene se desvalorize ainda mais, o que pode desencadear uma intervenção cambial.
Autor  Mitrade Team
Acreditamos que existe a possibilidade de ajustar a política de Controle da Curva de Rendimento (YCC). Entretanto, se o Banco do Japão mantiver sua postura atual, é provável que o iene se desvalorize ainda mais, o que pode desencadear uma intervenção cambial.
placeholder
WTI cai mais de 2% em meio ao aumento dos estoques de petróleo nos EUA e aos problemas da demanda globalO petróleo bruto WTI cai para US$ 76,50 por barril, uma queda de 2,14%, após um aumento maior do que o esperado nos estoques de petróleo bruto dos EUA e níveis recordes de produção.
Autor  Mitrade Team
O petróleo bruto WTI cai para US$ 76,50 por barril, uma queda de 2,14%, após um aumento maior do que o esperado nos estoques de petróleo bruto dos EUA e níveis recordes de produção.
placeholder
Analistas estão otimistas com o ouro em 2024 em meio a incertezas globaisInvesting.com – Cada vez mais analistas mostram otimismo com os preços do ouro até meados de 2025, devido a uma combinação de fatores, como compras por bancos centrais, demanda de investidores e condi
Autor  Investing.com
Investing.com – Cada vez mais analistas mostram otimismo com os preços do ouro até meados de 2025, devido a uma combinação de fatores, como compras por bancos centrais, demanda de investidores e condi
goTop
quote