The U.S. Dollar returned to gains this morning following growing concerns during overnight trading about the chaos that the war imposes on the overall health of the global economy.
Overview
American and Chinese leaders are scheduled to have talks later today regarding the intensifying war effort, death toll, and repercussions to markets. Unfortunately, the frustration from Russia in the invasion’s length is worrying Western leaders that higher-level weapons may start being used. Oil prices have swung upward and above $100.0/barrel again while volatility indexes are rising.Markets are certainly worried that in this environment of monetary tightening, inflationary pressures, and physical impediments to trade, economic outlooks could use a downward revision as the first quarter of the year comes to an end. We can expect a lot of the buck’s losses from the past few days to diminish and if the headlines continue so negative, perhaps a return to levels seen at the start of the month when the war was fresher as a shock to markets.
At the time of writing, the commodity-based currencies of Australian as well as New Zealand Dollar, along with Norwegian Krone, were the only peers holding their ground against the greenback.
What to Watch Today…
- No major economic events are scheduled for today
TOP SPOT AGAIN! | #1 G10 Forecaster for 6th Time
Bloomberg ranks Monex USA (formerly Tempus) for top G10 Forecaster, NZD, CHF, AUD, MXN, and GBP! Learn More
EUR
The Euro started losing ground to end the week as there are growing fears over how long the Russian effort to invade Ukraine will last and how deeply negative the effects can be on the prospect for growth after a pandemic. Physically, the continental mass is suffering from higher food and energy prices as trade has been tumultuous and insecure.
The interdependence of eastern and Western Europe is being compromised after decades of mastering a flow of materials and finished products between one another. Some European Central Bank officials made comments on the possibility of hikes for the year increasing since inflation must be combatted, but the likelihood of hikes is overshadowed by the danger the war is posing.
JPY
The Japanese Yen has fallen to its weakest point since the end of 2015 as the commitment to stimulus from the Bank of Japan contrasts greatly with the mentality of other central banks that are tightening like the Fed. Prices of oil rising can also make a serious dent in the Japanese economy as it relies on a healthy globalized trade flow that is feeling the toll of war right now.
Expect the buck to move without much guidance as the Fed’s seriousness in hiking rates is priced-in and the focus on conflict only allows for the buck to rise as a safe-haven must-have.
Ready to spin the currency market moves in your favor?
DISCOVER HOW WE CAN HELP YOU SEND or RECEIVE PAYMENTS
