Asian currencies against the dollar had minor fluctuations, with the Japanese yen, Singapore dollar, and Taiwanese dollar showing slight gains, while the Chinese yuan experienced a slight decline; overall, there were small changes compared to the end of 2022.
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 Eurozone and UK services PMI data led to a drop in the euro and pound, while weakness was observed in Canadian consumers and China, suggesting a darkening global growth picture as interest rates rise, with the US being the main source of growth but showing signs of slowing in mortgage applications and student debt repayments.
The combined footprint of Japan and China in the US Treasury market is at its lowest on record, leading to speculation that they may sell dollars and liquidate US Treasuries to support their currencies without causing significant market disruption.
In August, the USD strengthened against major currencies, with the dollar index up 2.28%, EURUSD down 1.83%, USDJPY up 2.83%, GBPUSD down 1.96%, USDCAD up 3.25%, and AUDUSD down 4.64%. Meanwhile, major global stock indices experienced declines, led by Hong Kong's Hang Seng index and China's Shanghai composite index.
The US dollar will remain dominant in global trade, but China's yuan is gaining popularity among developing countries such as Russia, Brazil, India, and South Africa.
Despite efforts by countries like China and Russia to reduce the dominance of the US dollar, its share in global payments has reached a record high, with 46% of foreign-exchange payments in July involving the greenback, according to SWIFT data.
The upcoming events include UK Bank Holiday, Australian Retail Sales, Japan Unemployment Rate, US Consumer Confidence, US Job Openings, Australian CPI, US ADP, Japan Retail Sales, Chinese PMIs, ECB Minutes, Eurozone CPI, Eurozone Unemployment Rate, US Jobless Claims, US Core PCE, Swiss CPI, US NFP, US ISM Manufacturing PMI. The US Consumer Confidence is expected to be lower in August compared to July, while the labor market data is the top priority for the Fed and markets. The Australian CPI is expected to show further disinflation. The Chinese Manufacturing PMI is expected to tick higher, and the Eurozone CPI is expected to move lower. The US Jobless Claims are expected to increase, and the US PCE is expected to be higher. The Switzerland CPI is expected to match the prior reading, and the US NFP report is the main event of the week. The US ISM Manufacturing PMI is expected to tick higher.
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 dollar is hesitant as traders wait for economic data, while the yen struggles near levels that resulted in intervention last year.
Global markets are watching for the latest round of retailer earnings reports as well as the release of the July Job Openings and Labor Turnover Survey from the Bureau of Labor Statistics, while European indexes are being boosted by a jump in commodity prices linked to China's stimulus measures.
The USD/JPY spiked to a cycle high but reversed course, while weak labor market figures were reported in both the US and Japan, supporting the dovish stance of the Bank of Japan.
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 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.
UBS reports higher than expected profits, job creation in the US slows, and markets rally on weaker economic data and hope for a pause in interest rate hikes. China's factory activity shrinks but at a slower pace, while retail sales increase. There are opportunities for investors in other Asian markets.
The US dollar has experienced a significant bounce in August, driven by strong US economic data and upward revisions to growth forecasts, making it the only G-10 economy to see positive revisions and outperform the rest of the G-10 currencies this month.
Despite the divergence in global economies, the US dollar still remains dominant, holding a record-high share of 46% on SWIFT in July, while the euro's share slipped to a record low.
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 U.S. dollar declined due to weaknesses in economic growth, leading to a boost in the performance of gold and U.S. equities, while other global assets experienced mixed price movements throughout the week.
The U.S. dollar drifted in cautious trading as investors considered U.S. jobs data that indicated a potential slowdown, suggesting that the Federal Reserve may be nearing the end of its monetary tightening cycle.
The US dollar edged lower as US markets were closed for a holiday, and investors considered US jobs data indicating signs of cooling, leading to speculation that the Federal Reserve may be at the end of its monetary tightening cycle.
The US Dollar is expected to trade sideways at the start of the week, with no major drivers or data points to monitor until markets open on Tuesday. The focus for the week will be on Wednesday's release of the Services PMI survey and several central bank speeches leading up to the next Federal Reserve meeting on September 20. Additionally, the article provides information on central banks and their role in monetary policy and interest rates.
Summary: The US markets ended mixed after the release of the latest jobs report data, with the economy adding 187,000 jobs in August but seeing an increase in unemployment, while in Asia, Japan's Nikkei 225 closed higher, Australia's S&P/ASX 200 was down, and China's Shanghai Composite and Shenzhen CSI 300 declined. Additionally, European markets saw declines, and commodities such as crude oil, natural gas, gold, silver, and copper experienced varying price movements.
JP Morgan predicts that the U.S. dollar is at risk of losing its global reserve status as BRICS countries increase their use of local currencies for trade settlement, although the chances of this happening in the near future are slim.
Stock indices finished today’s trading session in the red, with the Nasdaq 100, S&P 500, and Dow Jones Industrial Average all falling. The technology sector was the session's laggard, while the utilities sector was the leader. The U.S. 10-Year Treasury yield increased, and the Atlanta Federal Reserve's latest GDPNow reading estimates that the economy will expand by about 5.6% in the third quarter. The Federal Reserve released its Beige Book report, noting a tourism boom but slower spending in other areas. The ISM Non-Manufacturing Purchasing Managers' Index came in higher than expected, and mortgage applications fell to their lowest level since 1996. The U.S. trade deficit widened less than expected in July. U.S. stock futures inched lower, and European indices trended lower. Asia-Pacific markets were mixed.
The U.S. dollar's dominance in the gold market may be losing momentum, potentially leading to new all-time highs for gold as the dollar weakens, according to market strategist Carley Garner. She expects the U.S. dollar index to hold resistance below 105 points and eventually retest support at 99 points, which could be a game changer for gold, potentially pushing prices to $2,600 an ounce. Garner also highlights the resilience of gold and the potential for a selloff if the Federal Reserve shifts to a more neutral monetary policy stance. However, she is not as optimistic about silver, preferring to focus on gold.
Emerging market currencies are expected to struggle to recover from their losses this year due to high U.S. Treasury yields, safe-haven demand, and a slowing Chinese economy, keeping the dollar strong, according to a Reuters poll of FX analysts.
The U.S. dollar's share in global reserves has fallen below 60% for the first time in decades, as other currencies like the Euro, Pound, and Yen are on the rise due to a growing number of countries settling trade in their national currencies, driven by the de-dollarization process initiated by BRICS to end reliance on the U.S. dollar.
The dollar strengthens against the yen and keeps the euro and sterling near three-month lows as investors rely on the resilience of the U.S. economy, while China's onshore yuan hits a 16-year low due to a property slump and weak consumer spending.
Asian currencies, including the Japanese yen and the Singapore dollar, are trading against the US dollar with varied movements, while the year-to-date percentage changes for the currencies show fluctuations.
The U.S. dollar index had its eighth consecutive week of gains, while global stock indexes ended slightly higher before key U.S. inflation data, with concerns that high interest rates may remain in place for longer than expected despite the Federal Reserve likely keeping rates unchanged this month. Longer-dated Treasury yields eased, Apple shares rose slightly after two days of losses, and oil prices increased.
Oil prices surge to the highest level in 10 months as Saudi Arabia and Russia extend production cuts, raising concerns about inflation and higher interest rates, while the resilient U.S. economy strengthens prospects for interest rate hikes; tensions escalate in the auto sector as contract negotiations with major automakers continue; GameStop CEO Ryan Cohen faces scrutiny from the SEC over stock trades; Apple's market value plummets due to concerns over China's ban on public workers using foreign-branded devices; semiconductor stocks weaken amid export restrictions on China; energy sector excels while industrials and utilities lag; upcoming key economic data to watch includes inflation rate, Producer Price Index, retail sales figures, and Michigan Consumer Sentiment data.
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.
Summary: Despite a slight rise in US markets on Friday, major indexes finished the week lower, with Europe's Stoxx 600 index also experiencing losses, while the G20 nations released a joint communique addressing Russia's war in Ukraine, omitting overt criticism from last year's statement. Elsewhere, Instacart plans to go public at a lower valuation, SpaceX's Starship Super Heavy rocket remains grounded, and the upcoming consumer price index report could impact the Federal Reserve's monetary policy decisions.
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.
Bitcoin's weak performance and its potential "double top" structure raise concerns of more downside, with predictions of new local lows; however, there are indications that Bitcoin may experience a major shakeout before rebounding to "fair value" and the 200-week EMA near $25,600 may offer some optimism; debate ensues over the possibility of Bitcoin filling the $20,000 CME futures gap; liquidity levels on BTC/USD markets continue to increase, adding to bearish predictions; ahead of the Federal Reserve meeting, the United States Consumer Price Index (CPI) data release on September 14 brings potential volatility to the market and may impact crypto market expectations.
The US Dollar Index (DXY) is expected to experience a significant decline after a period of rally, according to a popular crypto trader, as the completion of a key Elliott Wave theory pattern suggests a downward trend for the dollar.
The U.S. dollar stabilized as traders await U.S. inflation data, while sterling weakened after the U.K. economy contracted more than expected in July.
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%.
Australia's labor market may have peaked as the unemployment rate hovers around historic lows, leaving little room for improvement and potentially opening the door for further job losses, which could negatively impact the Australian Dollar (AUD) that has already been weakening due to slowing Chinese demand. Economists expect an increase in jobs for August, but there is potential for a downside surprise and a second consecutive month of declines.
The US Dollar underperformed against major currencies last week, crude oil continued to rally, and gold prices were cautiously higher, while upcoming events like central bank rate decisions and the Bank of England rate hike are expected to impact the market.
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.
The US dollar has made an unexpected comeback, with its rebound causing ripples in global markets and impacting investors, officials, and companies.
A stronger US dollar has a significant negative impact on emerging market economies compared to smaller advanced economies, as it decreases economic output and trade volume, worsens credit availability and capital inflows, tightens monetary policy, and leads to stock-market declines. Emerging market economies with anchored inflation expectations or flexible exchange rate regimes fare better, and global current account balances decline with a stronger dollar, reflecting a contraction in global trade. Measures such as global safety nets and macroprudential policies can help mitigate these spillover effects.
The BRICS bloc, including countries like India, China, and Russia, is slowly reducing its dependency on the US dollar and using their local currencies for trade, which could potentially weaken the US dollar's position as the dominant global currency.
