Tag: US Dollar

US Dollar gets costlier to borrow in China in new sign of Yuan woes

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The premium to borrow dollars in China’s local markets has jumped over the past month, another example of the resurgent US currency’s global reach and persistent headwinds facing the yuan.

China’s overnight interbank dollar lending rate hit a record 5.47% on March 29 after a steady climb, before easing to 5.42% Thursday, Bloomberg-compiled data show. That has pushed its gap with the US secured overnight financing rate, a global benchmark, to the widest since July twice in the past two weeks.

The tightening supply of the US currency in China has coincided with the dollar’s global rebound this year as a series of upbeat economic data weakened the case for the Federal Reserve to cut interest rates. If the trend persists, Beijing may have to resort to a familiar tool to ease dollar liquidity as well as pressure on the yuan.

“The gap hinting at an imbalance between supply and demand for dollar liquidity points to pressure on the yuan,” said Zhaopeng Xing, senior strategist at Australia & New Zealand Banking Group. “There is a chance that the PBOC might unleash some dollar liquidity via cutting the foreign exchange reserve requirement ratio.”

Despite the nation’s $3.2 trillion foreign reserves, the amount of foreign currencies that Chinese companies and banks can tap is subject to a confluence of factors, including supply from large state-owned lenders.

In a bid to defend its currency, China has slashed the ratio that sets the amount of foreign-currency deposits banks need to hold as reserves three times since 2022, with the last reduction in September.

Since then, China’s central bank has mostly relied on a strong daily reference rate and dollar sales by state lenders acting as its proxy to alleviate pressure on the yuan. After falling below a key support level in late March, the Chinese currency has extended its drop onshore to a five-month low against the greenback.

However, there’s only so much Beijing can do in the face of the dollar’s global strength.

While China might consider more tools to support the yuan, they “can only help to slow depreciation pressure as we have seen in the past and buy time until the broader market forces shift or fundamentals improve at home,” said Fiona Lim, a senior currency strategist at Malayan Banking Bhd. in Singapore.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

US markets will lose steam even as Fed signals rate cuts, survey shows

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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US stocks will lose momentum and Treasuries have yet to hit bottom even after the Federal Reserve decided to stick with its guidance for interest-rate cuts this year, according to Bloomberg’s latest Markets Live Pulse survey.

Investors expect the S&P 500 Index to rise to about 5,454 at the end of 2024, from just under 5,225 on Wednesday, according to a median of 93 responses. That would imply a marked deceleration in its gains, given the gauge has surged almost 10% this year after climbing 24% in 2023.

The survey forecast underscores ongoing skepticism that US stocks can sustain a breathtaking rally to record highs, a move driven by the so-called Magnificent Seven technology names and optimism that artificial intelligence will boost productivity.

More pain is seen for the bond market: the median call in the survey was for the 10-year Treasury yield to increase to about 4.5% from just under 4.3% currently.

Meanwhile, the US dollar may crack, according to the survey. Only 18% of respondents see the Bloomberg Dollar Spot Index climbing from current levels, while more than a third expect it to stagnate and the rest anticipate a decline. The index has climbed about 2% in 2024, unwinding much of its 2.7% decline last year.

The yen is expected to lead the charge against the dollar after it pulled back from close to the weakest since 1990 in the wake of the Fed meeting. Japan’s currency was forecast to outperform by 43% of the respondents, more than double the next-most popular picks — the euro and the British pound.

The yen sank to touch 151.82 per dollar before the Fed, and is still down almost 7% in 2024 after the Bank of Japan committed to maintaining accommodative policy settings on Tuesday even after carrying out Japan’s first rate hike since 2007.

Treasuries, the world’s biggest government bond market, have lost more than 3% so far this year as traders were forced to unwind bets on rapid, steep Fed cuts.

The Fed held steady for a fifth-straight meeting as Chair Jerome Powell said higher-than-expected inflation figures at the start of the year didn’t change the broader story that price gains were slowing on a “sometimes-bumpy road.”

That affirmed expectations for the Fed to stay the course on rate cuts later this year, which buoyed tech megacaps and helped drive US stocks to a fresh record on Wednesday.

Some 55% of the Pulse survey respondents said they expect stocks to outperform bonds once the Fed does start reducing rates, with a slightly smaller share saying the opposite.

The MLIV Pulse survey was conducted among Bloomberg terminal clients immediately after the Fed decision by Bloomberg’s Markets Live team, which also runs the MLIV blog. Sign up for future surveys here.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Dollar ends week under pressure as data keeps rate cut hopes alive

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The dollar traded modestly weaker against most major peers on Friday and was on pace for its worst weekly showing against the euro this year after mixed data kept an anticipated June interest rate cut from the Federal Reserve on the table.

Nonfarm payrolls increased by 275,000 jobs last month, the labor department’s Bureau of Labor Statistics said in its closely watched employment report on Friday. Data for January was revised down to show 229,000 jobs created instead of 353,000 as previously reported.

The unemployment rate rose to 3.9% in February after holding at 3.7% for three straight months, the data showed.

“The market had been getting a little worried, I think, that the Fed was stepping back from being in a position to cut rates soon, particularly given the recent inflation reports,” said Stuart Cole, chief economist at Equiti Capital.

“Today’s report should provide some optimism that, even if the scale of loosening will not be as strong as considered at the turn of the year, things are still moving in the right direction to allow the Fed to cut this year,” he said.

“In the short term at least, I think the dollar will be trading on a softer footing,” Cole added.

The euro was 0.06% lower against the dollar at $1.09425. The common currency hit an eight-week high earlier in the session and was up nearly 1% for the week, its best weekly performance against the buck since the week ended Dec. 22.

The ECB kept rates at record highs of 4.00% on Thursday while cautiously laying the ground to lower them later this year, saying it had made good progress in bringing down inflation.

The euro got a lift this week as the dollar came under pressure after Federal Reserve Chair Jerome Powell sounded more confident about cutting interest rates in coming months.

Speaking on Thursday, Powell said the Fed was “not far” from having the confidence it needed to cut rates. Currencies typically weaken if central banks lower interest rates.

“(Friday’s data) really kind of solidifies what Chair Powell was saying this week, about the confidence he had in the potential to begin the rate cutting cycle this year,” said Lindsey Bell, chief strategist at 248 Ventures in Charlotte, North Carolina.

Meanwhile, the yen rose to a five-week high against the dollar, aided by reports the Bank of Japan is warming to the idea of raising interest rates and considering a new quantitative monetary policy framework.

Jiji news agency reported the BoJ is considering a framework that will show the outlook for upcoming government bond buying amounts.

Separately, Reuters reported a growing number of BoJ policymakers could support ending negative interest rates this month on expectations that this year’s annual wage negotiations will yield strong results, four sources familiar with its thinking said.

Against the yen, the dollar was 0.68% lower at 147.05 yen, its weakest since Feb. 2.

“The yen is rising as speculation mounts that the BoJ will buck the global central bank trend and hike interest rates later this month,” said Kathleen Brooks, research director at XTB.

“In the short term, a powerful downtrend seems to be building for USD/JPY, and we believe that this pair could test 145.00,” she added.

Sterling rose on Friday against a weakening euro and dollar after signs that the European Central Bank (ECB) and the U.S. Federal Reserve might be closer to cutting rates than the Bank of England (BoE). The pound rose 0.34% to $1.2854 after hitting its highest since late July.

Firming hopes that interest rates in the U.S. and Europe will start to fall in June also helped prop up the risk-sensitive Australian and New Zealand dollars. The Aussie was up 0.09% while the kiwi was 0.05% higher.

In cryptocurrencies, bitcoin was up 2.77% at $69,207, after hitting a record high of $70,175.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Dollar index on track for first weekly fall this year

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The U.S. dollar index was on track for its first weekly fall in 2024 on Friday as investors took a breather from buying the currency following an almost two-month rally built on expectations that the Federal Reserve will begin cutting rates later than previously expected.

Investors have pushed back expectations for the first Fed rate cut to June, from May, and dramatically reduced how far they see the U.S. central bank cutting its benchmark rate. Fed officials have projected three 25 basis point cuts this year, while markets had priced for as many as seven.

“The dollar’s rally this year has been predicated on the markets converging back to the Fed,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.

Traders may also be pricing for the likelihood that economic data will begin to slow.

“I think starting with the February jobs data, which is due March 8, we’re going to begin seeing a series of weaker U.S. economic data,” Chandler said.

Personal Consumption Expenditures (PCE) due next week may also provide clues for Fed policy.

New York Fed President John Williams sees the U.S. central bank on track for interest-rate cuts “later this year,” despite stronger-than-expected readings on inflation and the labor market in January, according to an interview published Friday by Axios.

The dollar index was little changed on the day on Friday at 103.93 and on track for a weekly loss of 0.34%. It has bounced from a five-month low of 100.61 on Dec. 28 and is holding below a three-month high of 104.97 reached on Feb. 14.

The greenback has risen this year on enduring economic strength and as Fed officials caution against cutting rates too soon as they seek to bring inflation back closer to their 2% annual target.

Now, however, investors are waiting on further economic indicators for fresh clues on monetary policy.

“It’s not the time yet to sell the dollar, but we think it will start to weaken in the second quarter, assuming that the Fed will cut in June and continue cutting rates once a quarter,” said Athanasios Vamvakidis, global head of G10 forex strategy at BofA Global Research.

BofA expects the euro to strengthen to 1.15 versus the greenback by the end of the year.

“If the U.S. economy remains so strong, we have to change our view, as the Fed might not be able to cut in June or not even this year,” Vamvakidis added.

Improved risk appetite that has seen stock markets set records in several countries this week may have also reduced demand for the U.S. currency, which is seen as a safe haven.

The euro was little changed on the day at $1.0822. It has dropped from $1.11395 on Dec. 28, but is up from $1.0695 on Feb. 14.

German business morale improved in February, a survey showed on Friday, though probably not enough to prevent Europe’s biggest economy from slipping into another recession.

ECB President Christine Lagarde on Friday called the relatively benign fourth quarter wage growth data encouraging but not yet enough to give the European Central Bank confidence that inflation has been defeated.

YEN WORST PERFORMER

The yen is the worst-performing G10 currency this year, with the greenback gaining 6.7% against the Japanese currency. The dollar fell 0.04% to 150.45 yen on Friday.

The Japanese currency is headed for a fourth weekly drop as investors chased better yields just about everywhere else, wagering Japan’s rates would stay near zero for some time.

With the Fed expected to hold rates higher for longer, investors are staying in carry trades in which they sell or borrow the yen and invest in higher yielding currencies.

“For the dollar/yen to weaken, we need the Fed to start cutting rates,” said BofA’s Vamvakidis.

In cryptocurrencies, bitcoin fell 1.01% to $51,122.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Gold drops as dollar, yields rise on stronger US jobs data

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Gold prices slipped on Friday as the dollar and yields jumped after a strong US nonfarm payrolls report which created some uncertainty about whether the Federal Reserve might start cutting interest rates soon.

Spot gold was down 0.8% at $2,038.59 per ounce at 18.45 GMT (12.15 am IST), but prices were up nearly 1% for the week and have held above the key $2,000 level since the start of the year.

US gold futures settled 0.8% lower at $2,053.7.

The dollar index was 0.9% higher, making bullion more expensive for overseas buyers. Benchmark 10-year bond yields also gained.

US employers added 3,53,000 jobs in January, beating the 1,80,000 economists had expected. A resilient economy and strong worker productivity encouraged businesses to hire and retain more employees, a trend that could shield the economy from a recession this year.

With a decline of less than 1% since the data, gold is ”holding on like a barnacle despite a whopper of an employment report,” said Tai Wong, a New York-based independent metals analyst.

”But we might need to wait a little and see if gold grinds much lower,” added Wong.

According to the CME Fed Watch Tool, traders now expect about a 70% chance of a US rate cut in May, compared to 92% before the data. Lower interest rates boost non-yielding bullion’s appeal.

Fed Chair Jerome Powell this week dismissed the idea of lowering interest rates in the spring but voiced confidence that inflation would return to the 2% target.

”If these (interest) rates stay where they are and there is a lack of clarity around that, what we’ll likely see is a rather muted environment for the upside for gold,” said WGC market strategist Joseph Cavatoni.

Among other precious metals, spot silver lost 2% to $22.7 per ounce, platinum fell 2.1% to $894.50 and palladium was down 1.4% at $949.05.

Also read:  Market at close | Sensex, Nifty close in green, PSU stocks shine

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Dollar locked in a range ahead of US Federal Reserve interest rate decision, jobs data

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The US dollar held to narrow ranges against its major peers on January 30, as traders awaited the Federal Reserve’s monetary policy decision on January 31 for clues on when the US central bank might cut rates.

Data on job openings from the U.S. Department of Labor Statistics due later on Tuesday will in the meantime offer a prelude to the closely watched payroll report to be released on Friday.

The dollar index held steady during Asian hours, last trading around 103.50 as market participants moved cautiously ahead of the two-day Fed meeting that begins on Tuesday.

With the Fed expected to hold interest rates steady, markets will focus on the tone that Fed Chair Jerome Powell strikes at the press conference on Wednesday and any hints of rate cuts in the near future.

Markets are currently pricing in a 46.6% chance that the US central bank will begin cutting in March, dropping from 73.4% a month ago, according to the CME Group’s FedWatch Tool, as data has been reinforcing the view that the US economy remains resilient.

Also Read: What to expect from the US Federal Reserve’s January meeting

“I suspect that the FOMC meeting will not be as dovish as current market pricing suggests,” said Matt Simpson, senior market analyst at City Index.

“If recent Fed comments are anything to go by, the Fed are unlikely to release a dove into the crowd – and that risks a bounce for the US dollar and yields.”

Tuesday’s US job opening figures will kick off a week of domestic jobs data, culminating in the January US payrolls report on Friday. The data will give further indications of the state of the world’s largest economy.

The euro was down 0.09% at $1.0822 ahead of flash GDP data for the fourth quarter in the euro zone, where expectations are for a much weaker outlook than in the US.

Sterling was unchanged at $1.2709, holding firm ahead of the Bank of England’s monetary policy meeting this week.

Elsewhere, the US currency gave up 0.06% against the yen at 147.38 per dollar.

Also Read: 5 reasons why the US Federal Reserve may leave interest rates unchanged in January

With Japanese policy normalisation looking more likely in the second quarter, when the Bank of Japan will have additional wage data, the dollar-yen rate will “be more driven by the Fed than any expectations of a policy shift by the BOJ in the short term,” said Wei Liang Chang, currency and credit strategist at DBS.

“We thus expect dollar/yen to ease more pronouncedly towards the end of Q1.”

Japan’s jobless rate fell to 2.4% in December from the previous month, government data showed on Tuesday, just under economists’ median forecast of 2.5% in a Reuters poll.

The Australian dollar climbed 0.08% versus the greenback to $0.6616, after rising to a two-week high of $0.6625.

Also Read: US stocks close at a new record high as inflation expectations hit the lowest in over 3 years

Data revealed domestic retail sales slid 2.7% in December following a 1.6% rise in November, as Black Friday bargains brought spending forward.

The kiwi was up 0.2% at $0.6144, supported by comments from the chief economist at the Reserve Bank of New Zealand that inflation was still far too high.

In cryptocurrencies, bitcoin rose 0.41% to $43,355.85, after touching its highest level since Jan. 12, at $43,777.00, earlier in the session.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

US Dollar stages biggest rally since March as global risks pile up

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The US dollar staged its biggest rally in 10 months as traders questioned the scale of Federal Reserve rate cuts priced into markets and geopolitical tensions boosted demand for the haven currency.

The Bloomberg Dollar Spot Index rose 0.8% on Tuesday, its strongest advance since March 2023, as the dollar strengthened against every one of the world’s major currencies. The gauge closed at its highest level since December 13.

The dollar’s rise is defying widespread expectations that it would continue to drift lower this year on speculation that the Fed will start easing monetary policy as soon as March, reducing the interest-rate gap that once sent investors flocking to the US.

But the outlook is being clouded by concern that traders have overestimated how much policymakers will ease. At the same time, escalating conflict in the Red Sea shipping corridor and persistent weakness in China’s economy have heightened interest in the dollar as a temporary hideout from uncertainty.

“The market has been and remains too optimistic on Fed rate cuts,” said Paresh Upadhyaya, director of fixed income and currency strategy at Amundi Asset Management. “If you throw in any bouts of risk aversion triggered by geopolitical risk or political uncertainty, then that will help boost the USD via its safe haven status.”

Fed Governor Christopher Waller underscored the concerns about the central bank’s path on Tuesday, when he emphasized that policymakers should be methodical and careful with the pace of easing. His comments helped to push up Treasury yields, with those on benchmark 10-year notes rising as much as 14 basis points to a high of 4.08%.

The attacks in the Red Sea shipping lanes have raised fears of further disruption to global trade and supply chains that could fan inflation pressures. Houthi militants struck a second commercial ship in the span of a day, while Shell Plc paused the transit of oil tankers through the area.

At the same time, stimulus plans considered by Chinese officials are highlighting the difficulties that the world’s second-largest economy has faced since emerging from Covid lockdowns.

“I’m not surprised that some of that optimism has waned during the beginning of the new year,” said Amanda Sundstrom, a fixed income and foreign-exchange strategist at SEB AB in Stockholm. “There’s going to be some set-backs even if we still believe that we’re heading in the right direction.”

There are some signs that the dollar’s recent strength isn’t expected to fade soon, however. While options traders are cautious when it comes to further strength in the near-term, over a one-month horizon, risk reversals show the most bullish sentiment toward the dollar in a month, largely because of expected weakness in China’s currency.

On Tuesday, the euro fell to a one month-low of $1.0863 while the yen slumped to its weakest level in almost six weeks, at around 147 to the dollar. The Australian dollar and some Scandinavian currencies — typically barometers of global risk sentiment — fell over 1%.

Supporting the bullish dollar view is a growing number of investors and analysts who say swap markets are too aggressively priced for rate cuts from major central banks this year.

Traders have consistently overestimated how hawkish the Fed would be since the end of the pandemic. And European Central Bank Governing Council member Robert Holzmann said in an interview on Monday that threats stemming from lingering inflation and geopolitical risks will prevent the European Central Bank from lowering interest rates this year.

“The tone of central bankers this morning is one of hesitancy — especially what’s coming from the ECB” as rising freight rates reignite fears of supply-chain disruptions amid woes in both Red Sea and Panama Canal, said Thierry Wizman, director of global currencies and an interest-rate strategist at Macquarie Futures. “That’s why they are sounding less dovish.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

US Dollar begins 2024 with best day since March on Fed doubt

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The US dollar kicked off the new year with its biggest daily jump since March as traders pared back bets on the scale of the Federal Reserve’s 2024 interest-rate reductions.

The Bloomberg Dollar Spot Index closed higher by more than 0.7% on Tuesday as Treasuries and US stocks dropped, before holding steady in Asia trading Wednesday. It was the greenback’s biggest one-day advance since the wake of regional banking turmoil more than nine months ago.

Such a euphoric start to 2024 comes after a rocky path last year, when the dollar’s performance was largely driven by speculation surrounding when — and by how much — major central banks would cut their key policy rates. The currency fell 2.7% last year, the worst annual performance since the Covid-19 pandemic shocked the world in 2020.

“The Fed expectations are still all over the map,” Brad Bechtel, global head of foreign exchange at Jefferies. “We have to see how it plays out the next few days.”

Traders are already looking ahead to Wednesday’s release of minutes from the December Fed meeting, which will offer detail on a gathering at which officials signaled an end to their aggressive campaign of interest-rate increases. An array of labor-market data due later this week is forecast to highlight a labor market that remains resilient while gradually cooling.

The dollar gained against every Asian emerging-market peer on Wednesday. The South Korean won, Malaysian ringgit and Thai baht were amongst the biggest losers against the greenback.

While most of 2023’s drop in the dollar came as Wall Street increased bets on an easing cycle, traders are now reconsidering the monetary path ahead. While central banks have indicated that they’ve likely delivered the final hikes of this cycle, they will also be reluctant to give up the fight against inflation too soon.

“Markets, with the fledgling year, haven’t entirely decided what their base case is,” Helen Given, an FX spot trader at Monex USA. “We still don’t believe the Fed will be cutting rates as soon as March, and the minutes tomorrow are likely to prove us to be more correct than not.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

The US Dollar is set for its worst year since 2020

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The US dollar is poised for its worst year since the onset of the pandemic as Wall Street bets the Federal Reserve is set to lower interest-rates after safely reining in prices.

After being whipsawed by false starts calling for the end of the Fed’s rate hiking regime, a Bloomberg gauge of the greenback is down nearly 3% since January in the steepest annual drop for the US currency since 2020.

Much of the decline materialized in the fourth quarter on growing wagers that the Fed will sharply loosen policy next year as the US economy slows. That dents the dollar’s appeal as other central banks may keep their rates higher for longer.

Swaps traders are now factoring in Fed rate cuts of at least 150 basis points with the first cut coming as soon as March. That’s up from less than 100 basis points in mid-November and double what policymakers penciled in at their most recent meeting. Among speculative traders, dollar positioning has become all the more bearish since the Fed’s December meeting.

“Markets are positioned for this ‘Goldilocks’ scenario where the Fed will cut rates enough to stimulate the economy without reigniting inflation pressures,” said Amanda Sunstrom, a fixed income and FX strategist at SEB AB in Stockholm. “That’s driving the dollar performance.”

Sunstrom added that the softer dollar is likely to persist in 2024 as US data weakens, but not enough to spur a risk-off bid for haven assets like the greenback.

Still, the dollar’s sharp losses of late suggest room for at least a temporary rebound. The Bloomberg Dollar Spot Index’s 14-day relative strength recently fell below 30, a signal to some that the greenback is now “oversold” and primed for a reversal.

On Thursday, Bloomberg’s dollar gauge edged higher for the first session in five as global bonds pared a recent run of gains. The yen and franc nonetheless advanced against the dollar, rallying more than 1% intraday against the greenback in thin, year-end trading.

The dollar’s fall stands in contrast to the pound, which is set for its best year since 2017, and the franc, on pace for its strongest annual performance since 2010.

Sterling has rallied more than 5% against the dollar so far in 2023, the best run since the British currency was whipsawed by a series of Brexit votes six years ago. In Switzerland, the franc has risen to record, trade-weighted highs as traders increasingly see the Swiss National Bank holding policy tighter relative to its counterparts, even after a relatively dovish SNB meeting on Dec. 14.

“If I had to pick a central bank most likely to intervene to push down their currency next year it would be the SNB,” said Geoffrey Yu, a currency and macro strategist at BNY Mellon in London. As for the pound “I won’t chase it aggressively until we get BOE clarity.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

US Dollar’s share in central-bank reserves has declined, as per IMF data

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The US dollar’s share in global central-bank reserves dropped in the three months to the end of September, while holdings of the Japanese yen rose, International Monetary Fund data showed Friday.

The greenback accounted for 59.2% of globally allocated foreign-exchange reserves in the third quarter, down from a revised 59.4% in the previous three months, according to IMF’s Currency Composition of Official Foreign Exchange Reserves (COFER) data. That’s the lowest since the fourth quarter of last year.

Share of the Euro share in reserves also fell slightly to 19.6% from 19.7%, while the participation of the Japanese yen rose to 5.5% from 5.3%.

The shares of the Chinese yuan, the British pound, the Australian and Canadian dollars and the Swiss franc were little changed. A group of “other currencies” grew to 3.9% of reserves from 3.6% in the previous quarter.

While the US dollar has been the reserve currency of choice for most of the world’s central banks due to its depth and stability in global markets, it has been gradually losing dominance since the start of the millennium, when its share was above 70%.

The dollar’s supremacy has helped the US keep a lid on funding costs and run budget deficits, as trading partners put their dollars in US government bonds. It also supports American companies because the widespread use of dollars in global trade, such as for oil and commodities, often makes it cheaper for US multinationals to borrow.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow