- The U.S dollar eased back from a nearly two-year high in yesterday’s trading session
- The euro reversed course and turned positive ahead of a policy-setting meeting
- The Canadian dollar rallied after the Bank of Canada yesterday raised interest rates
Forex market
The dollar lost ground against most major peers on Thursday, falling from a two-year peak hit overnight, as U.S. yields paused their march higher after U.S data released earlier in the week showed inflation lower than some analysts had feared. Even the battered yen had some respite, making a small recovery from a 20-year low hit overnight, though analysts reckoned the yen's tone remained weak.
Otherwise, investors were awaiting a European Central Bank meeting later in the day, to see whether it was as hawkish as some of its global peers, after a spate of rate increases in recent days. The euro rose 0.2% yesterday ahead of the meeting, to $1.0911, and sterling gained 0.1% to a one-week
high of $1.3141, both extending larger gains made in the previous session. Today's focus will be the ECB meeting, and we're looking for a relatively hawkish outcome, so that might give a bit of support to the euro in the near term.
The dollar index, which measures the greenback against six peers, was down 0.17% at 99.670, compared to yesterday's intraday peak of 100.52, its highest since May 2020. The benchmark 10-year Treasury yield was 2.6693%. It rose steadily earlier this month - driven by expectations of more aggressive Federal Reserve tightening to combat inflation - and reached as high as 2.836% on Tuesday, ahead of U.S. inflation figures.
However, while high, these were not quite as bad as some had feared, which observers said caused yields to pause. Other central banks reinforced the hawkish global mood ahead of the ECB meeting. Earlier in the day, the Bank of Korea, surprised markets with a rate hike, and the Monetary Authority of Singapore also tightened policy. Yesterday, the Bank of Canada and Reserve Bank of New Zealand both raised rates by 50 basis points, the largest hike for each in around 20 years.
Euro-EUR
The single currency reversed course and turned positive ahead of a policy-setting meeting at the ECB today. Although the market is not anticipating any interest rate changes from the ECB at Thursday's meeting, market participants will be looking for a more hawkish tone from ECB President Christine Lagarde that could tee up a rate hike later in the year. Overall, the EUR/USD traded with a low of 1.0807 and a high of 1.0892 before closing the day around 1.0888 in the New York session.
Japanese Yen-JPY
The Japanese Yen weakened 0.19% versus the greenback. The Japanese yen pared losses against the dollar, which had soared to a nearly 20-year high against the yen at one point on Wednesday as aggressive tightening from the Federal Reserve contrasted sharply with the Bank of Japan's ultra-loose monetary policy. Overall, the USD/JPY traded with a low of 125.32 and a high of 126.30 before closing the day around 125.59 in the U.S session.
British Pound-GBP
The British Pound dropped yesterday to its lowest level against the U.S dollar since November 2020 as British consumer price inflation leaped to its highest level in three decades. Raising doubts on how aggressive the Bank of England tightening measures will be, British consumer prices jumped to an annual rate of 7.0% in March. Overall, the GBP/USD traded with a low of 1.2971 and a high of 1.3115 before closing the day at 1.3115 in the New York session.
Canadian Dollar-CAD
The Canadian Dollar strengthened against its U.S counterpart yesterday, recovering from its lowest level in nearly four weeks, as oil prices climbed and the Bank of Canada announced its biggest single interest rate hike in more than two decades. The central bank raised its benchmark overnight rate to 1% from 0.5%. Overall, USD/CAD traded with a low of 1.2552 and a high of 1.2673 before closing the day at 1.2566 in the New York session.
Australian Dollar-AUD
The Australian Dollar hit a hurdle today when local jobs data failed to meet high expectations, though markets are convinced interest rates will still rise by June given mounting inflationary pressures. Bulls were disappointed when data showed unemployment stayed at 4.0% in March when they had looked for a drop to a 50-year low of 3.9%. Overall, AUD/USD traded with a low of 0.7358 and a high of 0.7416 before closing the day at 0.7410 in the New York session.
Euro-Yen EUR/JPY
EUR/JPY is trading above 14, 50 and 100 days moving average. Fast stochastic is giving a bullish tone and MACD is also issuing a bullish stance. The Relative Strength Index is above 61 and lies above the neutral zone. In general, the pair has gained 0.81%.
Sterling-Yen GBP/JPY
Currently, GBP/JPY is trading above 14, 50 and 100 days moving average. Fast stochastic is issuing a bullish tone and MACD is also indicating a bullish stance. The Relative Strength Index is above 60 reading and lies above the neutral zone. On the whole, the pair has gained 1.11%.
Aussie-Yen AUD/JPY
Currently, the cross is trading above 14, 50 and 100 days moving average. Fast stochastic is giving a bullish tone and MACD is also indicating a bullish stance. The Relative Strength Index is above 76 reading and lies above the neutral region. In general, the pair has gained 0.17%.
Euro-Sterling EUR/GBP
This cross is currently trading above 14, 50 and below 100 days moving average. Fast stochastic is indicating a bullish tone and MACD is also issuing a bullish signal. The Relative Strength Index is above 53 and lies below the neutral region. Overall, the pair has lost 0.32%.
Sterling-Swiss GBP/CHF
This cross is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing a bearish stance and MACD is also indicating a bearish tone. The Relative Strength Index is above 45 and lies below the neutral region. In general, the pair has gained 1.07%.
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