The United States Dollar snapped a three-day winning streak against most major currencies this morning as the world’s Easter holidays ended and liquidity across the G10 returned to more normal levels.
Overview
After global reopening, markets are finally reacting to US data readings over the last week. Despite employment numbers coming in ever so slightly above expectations at 236,000 jobs added in the month of March, markets largely discounted this upside because of expectations that credit conditions inside the US have tightened materially. Though the Federal Reserve is expected to hike rates again at the beginning of May, investors continue to bet on cuts later this year as recession fears loom.This morning, treasury yields are easing ahead of tomorrow’s consumer inflation report. The Fed is hoping, similar to the most recent inflation statistics seen out of Europe, that headline inflation will have fallen substantially. Meeting or exceeding market projections could spell doom for the US economy as the central bank would have little choice but to extend its current tightening cycle and put further pressure on broader economic conditions.
What to Watch Today…
- No major economic events are scheduled for today
- Monex USA Online is always open
Monex USA introduces OPTIONS
With currency exchange rates in a constant state of flux, companies transacting cross-border face the risk of losing substantial sums of money if they fail to hedge their exposure to these shifts. Monex USA now offers a wide range of FX options that could help your business better manage risk. Learn More
EUR ⇓
The single currency rallied roughly half a percent against the Buck overnight and into this morning as European and British markets reopened, returning EUR prices to roughly where they were Thursday afternoon. Traders are still betting the European Central Bank will raise interest rates by 50 basis points at its next meeting, compared with the Fed’s 25. Risk sentiment strengthened today, driving demand away from USD.
JPY ⇑
The Japanese Yen posted a gain against USD this morning after new Bank of Japan Governor Kazuo Ueda said at his inaugural briefing that the BoJ’s current monetary policy approach is appropriate and signaled no changes. Previously markets were primed for a surprise switch up in policy from the central bank, but after Ueda’s words, it seems likely the central bank will stay its course and markets welcome a steady hand as global uncertainty continues. Billionaire investor Warren Buffett also turned his attention back to the island nation, telling Nikkei he is considering boosting his investments in the country substantially.
