ACY Securities

The Australian Dollar ratcheted higher to 0.6593 from 0.6522 after RBA Governor Michelle Bullock said the central will not hesitate to raise rates again to combat inflation. Her remarks came after the Australian central bank held the cash rate steady at 4.35%.

In the past month, the Australian and New Zealand dollars, both classified as G10 commodity currencies, have experienced significant declines due to worsening global investor sentiment.

The recent market activities have been a rollercoaster, highlighting just how unpredictable financial markets can be. After a sharp drop, Japanese equity indices bounced back impressively with a 9-10% increase, which has brought some relief to investors worldwide.

The Dollar Index (USD/DXY), which weighs the value of the Greenback against a basket of 6 major currencies rebounded to 102.95 (102.70). US Stocks led by the SCP 500 soared following a rout which began this week.

The US economy created an anemic number of Jobs in July of 114K, way below 206K in June, as well as estimates of 175K. The Unemployment Rate climbed to 4.3% from 4.1%.

The British Pound (GBP/USD) plummeted to 1.2735 (1.2835) after the Bank of England cut its Official Bank Rate by 25 bps to 5.0%. While the move was expected, markets saw the likelihood of more reductions for the rest of the year.

In July, the US dollar faced a downturn against major global currencies. It slipped from 1.0717 to 1.0820 against the euro and tumbled from 160.84 to 150.46 against the yen. The Federal Open Market Committee (FOMC) maintained the federal funds rate steady at 5.25% to 5.50% during its July meeting.

On July 31, 2024, the Federal Reserve announced key decisions about its monetary policy, reflecting its assessment of current economic conditions.

The US Dollar eased across the board as traders braced for 3 central bank meetings. The BOJ kicks off its policy meeting later today with Japan’s public broadcaster NHK reporting the likelihood of a rate increase to 0.25%. Market forecasts are for an unchanged rate of 0.1%.

The Federal Open Market Committee (FOMC) is expected to maintain the current policy rates during its upcoming meeting. This decision aligns with recent communications from the Federal Reserve, which emphasize the need for greater confidence that inflation is moving sustainably toward the 2% target.

The Japanese yen has recently shown strength, trading at higher levels as it enters the third consecutive week of gains against the US dollar, reaching a recent low of 151.94.

The Dollar Index, a popular measure of the Greenback’s value against a basket of six major currencies (DXY) dipped to 104.33 from 104.40 following mixed US PCE data.