The U.S. Dollar is trading in less favorable ranges as this morning markets digest the news that Russia and Ukraine talks are not succeeding as much as markets want them to.
Overview
Although yesterday witnessed a bit of a stock rally, the difficulties surrounding war are still causing oil and energy prices to be at price points that threaten to derail all the risk-taking.Recessionary talk is heating up, especially after yesterday’s brief moment in which the two-year yield overtook the ten-year bond yield, a common sign right before recessions begin. The flash moment of doom was the first since 2019. Some economists have warned that the Federal Reserve’s stance on hiking gradually this year in the midst of global chaos may cause recession indeed. Investors now worry they face a bear market. Today, those feelings are benefitting the Japanese Yen and Swiss Franc as safe havens with moves of over half a percent over the buck. Data-wise, the release of ADP Employment Change for March revealed higher payrolls than expected and the last reading of 2021 Q4 Gross Domestic Product growth saw an expansion of 6.9%, almost the 7.0% expected. Personal Consumption took a hit as it grew only 2.5% vs. the 3.1% expected. U.S. officials are weighing how truthful the Russian retreat of forces will turn out to be and if it is indicative of wanting a peaceful resolution or rather a tactical move to re-arm forces as well as re-strategize.
What to Watch Today…
- No major economic events are scheduled for today
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EUR
The Euro has climbed in value as traders increase bets that the unexpected jump in inflation across the whole continent will force the European Central Bank to raise interest rates. Spain’s inflation rose at the quickest pace in four decades and Germany’s numbers are the highest since the unification of West and East in the 1990s. European consumers have no confidence as their consumer-price expectations are the highest since 1985. We shall wait for clarity if we are lucky enough to get any, out of the talks, and see if the toll on Europe lessens with a possible cease-fire.
JPY
The Japanese Yen has been recovering from its six-year lows as the Bank of Japan tries to maintain the country’s economy stable as the world seems to crumble. Haruhiko Kuroda, the BOJ governor, is committed to maintaining their yield curve control as they keep a cap on 10-year yields. Their purchasing of bonds will continue, and this pledge assures investors who seek JPY-denominated debt to hold something steady. Expect volatility to remain high, but for now, this move benefits a safe haven in the midst of turmoil. Perhaps a major turning point for the Yen.
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