The U.S. Dollar is trading in mixed ranges with some currencies recovering after having dipped in recent days, particularly following the Federal Reserve’s meeting.
Overview
As written about plenty, inflationary expectations will keep central banks alert and cautious, but with an eye on growth and the effects of their policies on its pace. Investors and traders looking for stock-market enthusiasm have been left a bit deflated as the chances of yet another hike to interest rates are not what they wanted to hear. Regardless, there may be other reasons to look for risk appetite returning as the world adjusts and prices in addition to borrowing costs.
As the year goes on, markets will hope that no recession develops and that the resilience of the economy, despite high borrowing costs, in its expansion can be sustained. With 10-year treasury bond yields at 4.5% for the first time since 2007, most risk appetite is down, but it has not translated into significant gains for the Dollar. Thus far in September, stocks are experiencing their biggest monthly loss since last December.
What to Watch Today…
- No major economic events are scheduled for today
- Monex USA Online is always open
JPY ⇓
The Japanese Yen is the worst-performing currency this morning, following the awaited Bank of Japan meeting that resulted in no deviation from its current easing stance. Indeed, the BOJ once more failed to give any desired signs to markets that they are pivoting towards a tighter monetary policy, much less considering any hikes to their interest rates. A big reason for the BOJ staying pat was evidence of disinflation, which delays any need to combat price growth with contractionary measures. Yen value has declined by over 13.0% thus far in 2023.
MXN ⇑
The Mexican Peso climbed against the buck, regaining what it had lost after markets came to terms with the heavy central bank presence in this week’s guidance. While some pessimistic feelings are crushing risk, good economic data keeps Mexico an attractive place for investment. Additionally, the rise of oil prices adds to other commodities that Mexico is exporting, especially at a faster pace now as it has taken the mantle of America’s largest trading partner and is best suited for border-to-border integration on supply-chain dynamics. Simply put, factors are boding well for MXN strengthening.
