iifl-logo-icon 1
IIFL

Invest wise with Expert advice

By continuing, I accept the T&C and agree to receive communication on Whatsapp

  • Open Demat with exclusive Advice & Services
  • Get a dedicated Relationship Manager to help you grow your wealth
  • Exclusive advisory on 20+ trading & wealth-based investment options
  • One tap Investments, Automated trading & much more
  • Minimum 1 lakh margin required
sidebar image

Dollar Surges on Strong US Data, Fed Rate Cut Bets Fade

19 Apr 2024 , 12:04 PM

As investors' and policymakers' expectations of the trajectory of Federal Reserve rate cuts this year have been pushed back by a hotter-than-expected U.S. economy, the resurgent dollar headed towards a second straight week of gains on Friday.

The minor halt in the greenback's surge since Thursday, which followed a rare trilateral warning from the finance chiefs of the US, Japan, and South Korea over the latter two's declining currencies, raised the possibility of a possible joint intervention, somewhat limited the currency's 0.17% weekly gain.

That's when the strength of the dollar puts a great deal of pressure on Asian currencies in particular.

The yen is currently trading at 154.61 against the dollar, close to a 34-year low and just below the 155 mark, which traders view as a fresh line in the sand that might signal Tokyo's involvement.

The Japanese yen was headed for a weekly loss of over 0.8% and has already lost 2% of its value for the month. The Bank of Japan (BOJ) will be meeting next week to discuss monetary policy.

BOJ Governor Kazuo Ueda highlighted the potential influence of currency fluctuations on the timing of the next policy change on Thursday when he stated that the central bank may boost interest rates once more if the yen's losses considerably increase inflation.

Sterling dropped 0.08% to $1.2427 elsewhere, on course to lose 0.18% for the

In other news, the value of sterling dropped 0.08% to $1.2427, putting it on track to lose 0.18% this week. With a 0.06% decrease to $1.0637, the euro was expected to record a little weekly loss.

Trader expectations are that the European Central Bank will start its rate-easing cycle in June, which will probably keep the euro weak for a while, even though predictions of a first Fed rate drop have been pushed out to later this year.

The U.S. central bank is now only predicted to cut by roughly 40 basis points (bps) according to Fed funds futures, which is a considerable retreat from the 160 bps of easing that was anticipated at the beginning of the year.

The change in rate expectations is the result of persistently high inflationary pressures combined with a plethora of strong U.S. economic data points that have consistently outperformed forecasts.

Due to this, Fed policymakers have also retreated from wagers that the US will lower interest rates as early as June. Chair Jerome Powell made a similar statement earlier this week, stating that restrictive monetary policy is necessary for an extended period of time.

The dollar gained 0.05% against a group of currencies to 106.22, staying close to its peak of 106.51, which was reached more than five months ago.

With a weekly decline of more than 0.8% in sight, the Australian dollar dropped 0.15% to $0.6411.

The relatively tight labour market was still expected to loosen, albeit more slowly, as seen by data released on Thursday showing that domestic employment decreased in March following a huge increase in the previous month, while the unemployment rate continued to rise.

With a 0.1% decline to $0.5895, the New Zealand dollar was on course to lose 0.7% for the week.

For feedback and suggestions, write to us at editorial@iifl.com

Related Tags

  • Currency
  • Dollar
  • FOREX
  • Yen
  • Yuan
sidebar mobile

BLOGS AND PERSONAL FINANCE

Read More

Most Read News

Stocks under F&O ban today, 29 May, 2024
29 May 2024|09:57 AM
Gold prices down

Gold prices down

Whatsapp
Facebook
Twitter
LinkedIn
29 May 2024|10:19 AM
Read More
Knowledge Centerplus
Logo

Logo IIFL Customer Care Number
(Gold/NCD/NBFC/Insurance/NPS)
1860-267-3000 / 7039-050-000

Logo IIFL Securities Support WhatsApp Number
+91 9892691696

Download The App Now

appapp
Knowledge Centerplus

Follow us on

facebooktwitterrssyoutubeinstagramlinkedin

2024, IIFL Securities Ltd. All Rights Reserved

ATTENTION INVESTORS
  • Prevent Unauthorized Transactions in your demat / trading account Update your Mobile Number/ email Id with your stock broker / Depository Participant. Receive information of your transactions directly from Exchanges on your mobile / email at the end of day and alerts on your registered mobile for all debits and other important transactions in your demat account directly from NSDL/ CDSL on the same day." - Issued in the interest of investors.
  • KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary.
  • No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account."

www.indiainfoline.com is part of the IIFL Group, a leading financial services player and a diversified NBFC. The site provides comprehensive and real time information on Indian corporates, sectors, financial markets and economy. On the site we feature industry and political leaders, entrepreneurs, and trend setters. The research, personal finance and market tutorial sections are widely followed by students, academia, corporates and investors among others.

RISK DISCLOSURE ON DERIVATIVES
  • 9 out of 10 individual traders in equity Futures and Options Segment, incurred net losses.
  • On an average, loss makers registered net trading loss close to Rs. 50,000.
  • Over and above the net trading losses incurred, loss makers expended an additional 28% of net trading losses as transaction costs.
  • Those making net trading profits, incurred between 15% to 50% of such profits as transaction cost.
Copyright © IIFL Securities Ltd. All rights Reserved.

Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213,IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248

plus
We are ISO 27001:2013 Certified.

This Certificate Demonstrates That IIFL As An Organization Has Defined And Put In Place Best-Practice Information Security Processes.