USD Weakens Amid Fed Speculation; BOE's Divergent Path Gains Attention
ACY Securities - Luca Santos
The US Dollar eased across the board as traders braced for key central bank meetings this week. The Federal Reserve's potential pivot towards a more dovish monetary policy has caused the USD to dip to its lowest level in seven months. This shift in sentiment reflects growing expectations that the Fed may soon begin a rate-cutting cycle, influencing market movements. Meanwhile, the Bank of England (BOE) is emerging as a key player, with its policy stance diverging from other major central banks, potentially maintaining a higher real policy rate among G10 nations by mid-2025.
Currency Market Overview
USD/JPY: The Yen climbed against the Greenback, with the USD/JPY pair tumbling to 145.650 from 147.37 from Tuesday. This movement reflects speculation about the Fed's potential rate cuts and the overall market sentiment towards a dovish policy shift.
EUR/USD: The Euro surged to its highest level of the year, finishing at 1.11327, from 1.0776 at beginning of this month of August. The recent remarks from Federal Reserve officials and the euro's relative strength against a weakening dollar contributed to this rise.
GBP/USD: Sterling raised to 1.30520 from1.26641 at beginning of this month. The British pound has faced volatility, influenced by market uncertainty and the BOE's cautious stance on monetary policy. Despite a year-to-date appreciation of 2.0% against the USD, recent market turbulence has pressured the pound.
AUD/USD: The Aussie Dollar strengthened, ending at 0.67417. Strong economic indicators, such as Australia’s June Building Permits, have contributed to this decline.
Other Currencies: The Kiwi (NZD/USD) came all the way up from 0.61631, to settling at 0.61400. The US Dollar also 101.472 against various Asian and Emerging Market currencies like USDCHN.
Global Bond Yields
Global bond yields are mixed as markets anticipated upcoming central bank decisions.
US 10-year bond yield: Trading at 3.81 0.13%.
Japan’s 10-year JGB yield: 0.87 and down -0.68% for the day.
On the Lookout
Tomorrow’s economic data calendar features USA, Eurozone, UK, with key releases including:
- USA: FOMC Minutes release, Global US Manufacturing PMI & Services PMI.
- Eurozone: Eurozone Manufacturing and Composite PMI & Services PMI.
- UK: Composite, Manufacturing and Services PMI.
- Japan: National Core CPI.
Trading Perspective
Expect increased volatility as we approach tomorrow’s release for the FOMC and the Eurozone PMIs release. Key points to watch:
- USD/JPY: Immediate support at 145.180 with resistance at 148.200. The pair could trade between 144.000 – 149.500. A potential higher than expected Japan CPI release on Friday could see a sharp movement towards 142.000.
- AUD/USD: Support at 0.6700, with resistance at 0.68. Likely trading range: 0.67236 – 0.67520.
- EUR/USD: Immediate support and resistance levels to monitor are, Resistance; 1.1140 and support at 1.10726. The Euro is expected to come lower to the support area this week.
- GBP/USD: Watch for support at 1.2996 and resistance at 1.30450.
This content may have been written by a third party. ACY makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplies by any third-party. This content is information only, and does not constitute financial, investment or other advice on which you can rely.
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