The U.S. Dollar improved overnight following a week full of Fed hawkishness that is culminating in a seventh-day rally for the buck.
Overview
Indeed, per the Bloomberg Dollar Spot Index, the greenback is trading at its highest level since July 2020. As officials have made it clear, inflationary growth is a serious threat that needs the balance sheet to be reduced significantly while at the same time requires sticking to the dot-plot forecasting seven interest rate hikes for the year. Although global equities have taken the news with some risk-off sentiment, they are back into positive territory today.
It is possible that the clarity in the Fed’s coordinated moves is priced-in and maybe even the buck may start losing some of its dominance long-term. For now, it is king.The global markets are still concerned about the COVID effects in China as Shanghai infection flare-ups are keeping the city in lockdown. Meanwhile, Europe continues to find ways to punish Russia that will also have a negative impact on their economy, stepping up the non-violent measures as reports of atrocities keep being revealed.
An analysis of inflationary growth finds that global food prices are climbing at the fastest pace ever with supply-chain woes increasing. U.S. government officials fear that the war has no clear end in sight and could even last for years.
What to Watch Today…
- No major economic events scheduled for today
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EUR
The Euro fell to its weakest point since March 7th as the European Union made the decision to ban coal imports from Russia. Naturally, traders, as well as investors, feel the impact on economic growth could be a major impediment to what was already a tough enough recovery from the pandemic. With elections in France also looking tighter than at any point in the campaign leading up to the first round of voting this weekend, the shared currency is feeling serious downward pressure.We feel this may be a bottom for the Euro, but strong assessments from governments that the war could last an indefinite period of time certainly cast doubt on our bullish foresight. We think there will be a strong push for energy independence projects that could boost economic growth as the need is desperate for self-production. At the time of writing, Euro kept falling to outdo March 7th worst level of the year against the buck.
CAD
The Canadian Dollar has experienced losses because of the turmoil in oil prices and ambiguity about the war’s long-term toll. Currently, it prevented further losses than the half-percent it incurred over the last few days following much-awaited labor data that comes ahead of the April 13th meeting.
Thus far, the fact that the Net change in employment came in lower than expected does not seem to be of negative impact on the “Loonie,” but we shall see if there is negativity ahead of the announcement that could prevent an expected 25-basis-points hike.
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