What has been behind the US Dollar’s recent poor performance?
The US Dollar continued to lose ground against its major peers on Thursday, extending a torrid run that has now seen the currency hit fresh three year lows and shed over 6% since mid-December alone. Investors mostly overlooked Wednesday’s lofty inflation numbers that suggested that Federal Reserve could be on course to raise interest rates on as many as four occasions in the US in 2018. So what factors have been behind this recent sharp downtrend? Concerns this week appear to
Dollar sell-offs, Zuma resigns & talks of a transitional Brexit
A stronger-than-expected set of inflation data out of the US on Wednesday was not enough to prevent the Dollar falling for another day, with the greenback slipping to its lowest level in over a week. Headline inflation in the US experienced its largest monthly increase in over a year in January, reinforcing the view that the Federal Reserve could raise interest rates on as many as four occasions in 2018. Prices rose by 2.1% in the first month of the year after investors had e
Sterling gives back gains following UK inflation data
Sterling edged higher against the US Dollar on Tuesday following the release of the latest set of UK inflation data, although gave back almost the entirety of yesterday’s gains as markets opened this morning. Tuesday’s inflation data further ramped up speculation that the Bank of England could be ready to raise interest rates again in the coming months. Despite a slowdown in food prices, headline inflation stood firm at 3.0% in January after the market had anticipated a decli
US Dollar rally halted after equity markets edge higher
The major currencies spent much of Monday in a holding pattern following a particularly hectic few days of trading amid last week’s sharp sell-off in equity markets. s is generally the case during periods of such dramatic declines in stock prices, the US Dollar and Japanese Yen were the best performers, as risk off trading led to a strong performance in those currencies deemed safer. Yet, with equity markets beginning to stabilise and initiate a tentative rebound on Monday, g
US Dollar bounces back amid equity market turmoil
Financial markets were dominated last week by the volatility in equity markets worldwide. After months of uninterrupted steady rises, stocks finally saw some serious downward pressure, though we note that even at their worst levels last week, indices were still healthily up from the levels of even three months earlier. Currency markets were initially spared from the turmoil. However, later in the week they started behaving in a typical flight to safety manner, lifting the US
Sterling soars as Bank of England signals faster pace of rate hikes
The Pound jumped by over half a percent against both the US Dollar and the Euro following the Bank of England’s ‘Super Thursday’ announcement yesterday afternoon, in which the BoE ramped up expectations for a sooner-than-expected interest rate hike in the UK. In what could be seen as a somewhat dovish tilt, the nine member strong committee voted unanimously to keep rates unchanged today, defying some expectations that one of the more hawkish members could vote for an immediat
Euro sinks as Wall Street stabilises, BoE to hint at further hikes?
The Euro slumped by almost one percent during London trading on Wednesday after stock markets steadied and investors were left disappointed by the choice of Germany’s new finance minister. Following a prolonged few months of negotiations, Angela Merkel’s CDU Party announced that it had finally reached an agreement to form a ‘grand coalition’ with the Social Democrats (SPD). Investors were, however, left disappointed by the announcement that current mayor of Hamburg and the pe
US Dollar retraces gains after volatile stock market moves
A resurgent US Dollar briefly touched a two week high against its major counterparts on Tuesday morning, before reversing gains to end London trading essentially unchanged. Financial markets remained rattled by the sharp sell-off in stock markets around the world in the first half of the week, which saw the S&P 500 index lose almost 5% of its value in just one day. While this led to a flight to safe haven currencies, as is typically the case during times of market stress, cur
Dollar recovers after dovish Draghi, equity rout fuels safe-haven flows
A strong set of economic data out of the US economy and some dovish comments from President of the European Central Bank (ECB) Mario Draghi helped the Dollar rally against the Euro for the second straight session on Monday. Speaking in Strasbourg, France, Draghi warned that a strong Euro could present a potential obstacle to the ECB in its quest to returning inflation in the currency bloc back to its 2% inflation target. In a typically cautious address, he claimed that ‘while