The U.S. Dollar sits in mostly tight ranges as global markets digest various moves by financial authorities to quell the fear around bond and equity markets.
Overview
In the past few days, the buck has managed to reach fresh new records that have many pondering the sustainability of financial systems. After the quick collapse of the British Pound and its domestic markets, the Bank of England said it was ready to buy long-dated government bonds in order to restore faith in the economy. The move was so drastic that it caused a major downward shift for 30-year dated bonds, which felt the most since 1996 after being at their highest since 1998.As we reach historic exchanges, there is now talk about what it could take to ever bring the greenback down. The White House has even needed to say that intervention or meetings to agree to depreciate the currency are out of the question. In a way, the Federal Reserve has taken the reins over the high value of the dollar as only Powell and company can uplift other FX if they do not meet expectations going forward of hawkishness in future FOMC meetings and if the moves are less telegraphed by their own decision. The perpetual fall of major peers continues, with the Chinese Yuan now at its weakest point since 2008. Tons of data in the form of GDP and Personal Consumer Expenditures tomorrow.
What to Watch Today…
- No major economic events are scheduled for today
Back to Back TOP Wins | #1 G10 Forecaster for Q1 2022
Bloomberg ranks Monex USA (formerly Tempus) as the top G10 Forecaster, NZD, CHF, AUD, MXN, and GBP! Learn More
EUR ⇓
The Euro continues to feel downward pressure as the future of all assets is at risk, with ongoing fears that a new wave of obstacles will arise. Besides some political changes and turmoil idiosyncratically per nation, now the energy crisis could become worse than it already has been.
German Naval authorities have made comments about investigating possible sabotage to natural gas lines on top of already ongoing shutdowns experienced with what little fuels still flow to the continental landmass outside Russia. Expect this to be a long-term issue that even cooperation amongst all EU members will find difficult to resolve, thus keeping EUR at historic lows.
GBP ⇓
The Pound has fallen to an all-time low as markets continue to disagree with future economic and budgetary plans for the country. Although the BOE has decided to go on unlimited long-dated debt-purchasing mode, there are fears that collateral calls will only exacerbate issues within the bonds market.
The opinion and analysis of Prime Minister Liz Truss’s plans to cut taxes and leave them unfunded, without a way to make up for the loss in tax revenue as the government still looks to spend and even invest. Such has been the negative attention to it all that even the International Monetary Fund is recommending a revision to particularly address so many cuts to top earners.
