### Summary
Global dedollarization efforts are facing a credibility challenge as currencies such as the Russian ruble, Chinese yuan, and Argentine peso suffer significant declines, highlighting the perceived stability and reliability of the US dollar.
### Facts
- š The Chinese yuan, Russian ruble, and Argentine peso have all experienced significant declines in value recently, causing their respective central banks to take measures to stabilize their currencies.
- š These declines come at a time when countries like Russia and China are actively trying to reduce their reliance on the US dollar in trade and investments, a trend known as dedollarization.
- š° However, the recent exchange-rate turmoil and instability of these currencies against the US dollar could undermine the dedollarization efforts and raise questions about the feasibility of finding a common currency to combat the dominance of the dollar.
- š± Dedollarization efforts in Argentina have been limited, with some even advocating for adopting the US dollar as the local currency to combat hyperinflation.
- š While the share of the US dollar in global reserves has decreased over the years, it still makes up nearly 60% of the world's foreign-exchange holdings, highlighting its long-standing dominance as the world's reserve currency.
Note: The text provided is truncated, so the summary and bullet points may not capture the complete context of the original text.
While strategic competitors in emerging markets are calling for change and the share of the US dollar held as official foreign exchange reserves has declined, it is unlikely that there will be a major shift in the US dollar's role as the central global currency due to the stability and reputation of the US government, as well as the challenges and limitations of other options like the renminbi.
The US dollar remains strong against major peers and the yen, as Treasury yields rise amid expectations of high US interest rates for a longer period, while China's central bank sets a stronger-than-expected daily midpoint for the yuan to counter mounting pressure on the currency.
The US Dollar strengthens as several BRIC countries express support for the currency, while Fed officials remain quiet on rate cuts, and geopolitical tensions boost the Greenback during US trading hours.
The US Dollar performed well against major currencies, with the British Pound, Euro, and Canadian Dollar underperforming, while the Chinese Yuan and Australian Dollar fared better; the Federal Reserve's indication of a higher terminal rate and potential further borrowing cost increases contributed to the market sentiment, leading to lower US equity markets; upcoming economic data includes consumer confidence, inflation gauges from key European countries, and manufacturing PMI gauges from China.
The US Dollar experienced a significant decline due to weak economic data and increased risk appetite, while the Euro and British Pound strengthened. The Australian Dollar and New Zealand Dollar also performed well, and gold and cryptocurrencies rallied.
The US dollar experienced a major technical reversal due to a weaker JOLTs report, leading to a drop in US interest rates, while market positioning played a role in the price action; the focus now shifts to personal consumption figures and US jobs data, with the euro and sterling firm but most other G10 currencies softer, and emerging market currencies mixed. In Asia, most large bourses advanced, but Europe's Stoxx 600 fell after rallying in previous sessions, while US index futures traded softer; European bonds are selling up, gold is consolidating, and oil prices are firm. Australia's CPI slowed more than expected, China is expected to release the August PMI, and Japan reports July retail sales. The US dollar has seen no follow-through selling against the yen, yuan, or Australian dollar, while the euro and sterling staged impressive price action. The JOLTS report saw the dollar and US rates reverse lower, and today the US reports advanced merchandise trade figures for July, with the Canadian dollar as the worst performing G10 currency yesterday.
The US dollar experienced weakness due to disappointing economic data, leading to speculation that the Federal Reserve may not need to be as aggressive in its monetary policy settings, while equities showed modest gains; Chinese PMI numbers beat estimates but concerns about the property sector lingered; USD/JPY dipped before recovering; and the DXY index stabilized after recent losses, with potential support levels identified.
The dollar's status as a global reserve currency is facing challenges as countries like China and India promote trade in their own currencies, digital currencies gain popularity, and geopolitical conflicts threaten the international monetary system dominated by the dollar.
The Euro Area's q/q growth is minimal, with the latest GDP release showing only a 0.1% expansion, raising concerns about the effectiveness of the ECB's monetary policy, while the US dollar remains strong due to robust Treasury yields and Euro weakness.
Quantitative easing (QE) is a monetary policy tool used by central banks to boost the economy by purchasing financial assets, such as government bonds, which increases the money supply and lowers interest rates; while its impact on cryptocurrencies is indirect, QE can lead to increased demand for cryptocurrencies as alternative stores of value due to devalued fiat currencies and greater liquidity in the market. However, the decentralized nature of cryptocurrencies makes direct application of QE challenging, with supply dynamics, forking and airdrops, stablecoins, and market dynamics having potential implications on the crypto industry. QE also has criticisms and limitations, including inequality escalation, market distortion, potential financial instability, and impairment of financial markets.
The US dollar has experienced a remarkable recovery over the past two months, erasing all of its losses for 2023, as strong economic data suggests the US economy will avoid a recession and makes the greenback an attractive investment compared to other currencies.
The US dollar's strength in the foreign exchange market, along with discussions of de-dollarization, highlights the divergence between the US and other major economies. The Dollar Index is on an eight-week rally, reaching a record high in international payments, while the euro's share has declined to a record low. In the week ahead, the US CPI and the ECB meeting are expected to be major events, with the US showing signs of inflation and weaker demand, and the euro facing challenges amid stagnation and inflation. China's CPI and PPI have shown some improvement, but the focus will be on yuan loans and real sector data. The eurozone's focus will be on the possibility of a rate hike by the ECB and the release of July industrial production figures. Japan's household consumption continues to fall, and the country may experience a contraction in Q3. The UK will release employment data and GDP details, while Canada will see data on existing home sales and the CPI. Australia will release its August employment data, and Mexico's peso positions may continue to adjust due to the winding down of the currency forward hedging facility.
The US Dollar performed strongly against major currencies, with the Euro experiencing its 8th consecutive weekly loss and the Chinese Yuan performing poorly, while global market sentiment was negative and stock markets weakened. In the coming week, market focus will be on the US inflation report, UK employment and GDP data, Australian employment data, and the ECB rate decision.
The Wall Street Journal reports a notable shift in the stance of Federal Reserve officials regarding interest rates, with some officials now seeing risks as more balanced due to easing inflation and a less overheated labor market, which could impact the timing of future rate hikes. In other news, consumer credit growth slows in July, China and Japan reduce holdings of U.S. Treasury securities to record lows, and Russia's annual inflation rate reached 5.2% in August 2023.
Cryptocurrency prices remained stable as inflation in the U.S. surpassed economists' expectations, with Bitcoin trading at around $26,100 and Ethereum experiencing a slight dip of 0.5%. The Federal Reserve will consider this report, among other factors, for its upcoming interest rate announcement on September 20. While inflation has decreased since June, it still exceeds the Fed's target of 2% annually. Core inflation, excluding volatile food and energy costs, decreased to 4.3% in August compared to July's 4.7%.
The US dollar remains stable in Asian trades as the yen and sterling experience slight fluctuations due to upcoming central bank meetings, including the Bank of Japan's policy meeting, the US Federal Reserve's hawkish pause, and the Bank of England's possible interest rate increase.
The US dollar remained strong against other currencies as traders awaited the Federal Reserve's rate decision, while the yen hovered near a 10-month low amidst speculation of intervention.
Summary: The US Dollar had mixed performance against major currencies, with the British Pound weakening and the New Zealand Dollar rallying; Wall Street took a hit after the Federal Reserve announcement, and the 10-year Treasury yield surged to its highest level since late 2007.
The U.S. dollar remains strong above the $105 mark, supported by the hawkish stance of the Federal Reserve and increased Treasury yields, while gold prices consolidate and oil prices rebound due to supply cuts and positive outlooks for the U.S. and China.
The U.S. dollar is gaining strength, causing concerns about interest rates and negatively impacting the S&P 500.
Asian currencies showed mixed movements against the US dollar, with the Japanese yen slightly down, the Singapore dollar up, and the Taiwanese dollar unchanged, among others; overall, there has been varied performance in currency rates across the region in 2023 so far.
Bitcoin and gold are expected to thrive amidst fiscal problems in the US economy and a potential pivot from the Federal Reserve, according to macro investor Luke Gromen. Gromen also suggests that the launch of a gold-backed currency by the BRICS alliance may weaken the US dollar as the world's reserve currency.
Three large U.S. banks, JPMorgan, Wells Fargo, and Citigroup, reported better-than-expected earnings for Q3 2023, driven by higher interest rates, although concerns over consumer resilience and geopolitical risks persist.
This week, investors will focus on Q3 2023 earnings reports, as well as important economic indicators such as September's retail sales and industrial production, to gauge the Federal Reserve's policy stance and shape expectations about the economy.
The Asian trading session saw the Chinese GDP grow by 4.9% in Q3, beating expectations, leading to gains for the AUD/USD and NZD/USD pairs; meanwhile, the US Dollar weakened against major currencies, especially the Australian Dollar.
The US Dollar remains stable as US yields continue to provide support, with Q3 GDP growth expected to accelerate before a potential slowdown in Q4.
