Main financial assets discussed: Euro (EUR), U.S. dollar (USD), Invesco CurrencyShares Euro Trust (FXE) ETF
Top 3 key points:
1. The relative interest rate differential between the European Central Bank (ECB) and the U.S. Federal Reserve (Fed) has been a key driver of the Euro's strength against the U.S. dollar in the past.
2. The changing tone of the ECB, with President Christine Lagarde being more dovish, and the diverging economic performance between the U.S. and Europe suggest that the Euro may weaken against the U.S. dollar.
3. Speculative positioning in the Euro is at its longest in years, and technical indicators suggest a potential breakdown in the Euro's value.
Recommended actions: **Sell** the Euro or the FXE ETF. Short the Euro directly via FX markets or buy a put spread on the FXE ETF.
### Summary
The Australian dollar has weakened significantly against the US dollar, euro, and British pound due to factors such as the US economy's strength, China's weak economic rebound, and a shift in the link between commodity prices and the Australian dollar.
### Facts
- The Australian dollar has reached its lowest level against the US dollar since the global financial crisis in 2009.
- The dollar has also reached its lowest level against the euro since the global financial crisis.
- The value of the Australian dollar against the pound is at its weakest since the Brexit poll.
- The US dollar's strength and expectations of a higher interest rate have contributed to the Australian dollar's weakness.
- China's weak economic rebound and deflation concerns have also affected the Australian dollar.
- The link between commodity prices and the Australian dollar has become less reliable recently.
- The trajectory of Shanghai's top 300 companies share index may indicate the future of the Australian dollar.
- A weaker Australian dollar benefits export industries and overseas visitors, while importers may face challenges.
- A tumbling dollar could support economic growth through increased exports and reduced imports.
📉 The Australian dollar is at its lowest against major currencies since the global financial crisis.
🇺🇸 The US dollar's strength and expectations of a higher interest rate contribute to the Australian dollar's weakness.
🇨🇳 China's weak economic rebound and deflation concerns affect the Australian dollar.
📉 The link between commodity prices and the Australian dollar has become less reliable.
📈 A weaker Australian dollar benefits export industries and overseas visitors.
### Summary
The strength of the U.S. dollar against other currencies, such as the Nigerian naira and Zimbabwean dollar, has made it difficult for local consumers to buy foreign goods, leading to economic troubles in these countries.
### Facts
- 💰 The strength of the U.S. dollar has pushed the price of foreign goods beyond the reach of local consumers in Nigeria.
- 💸 Many developing countries are unhappy with the dominance of the U.S. dollar in the global financial system.
- 🌍 The BRICS bloc, which includes Brazil, Russia, India, China, and South Africa, will discuss their grievances against the dollar at a meeting in Johannesburg, South Africa.
- 💵 The alternatives to the U.S. dollar, such as the euro and China's yuan, have not been able to rival its dominance.
- 🇦🇷 In Argentina, a presidential candidate is calling for the U.S. dollar to replace the country's troubled peso.
- 💼 In Zimbabwe, the U.S. dollar is widely used in transactions due to the instability of the Zimbabwean dollar.
- 💸 Vendors in Zimbabwe are even mending damaged U.S. dollar bills for a small fee due to a shortage.
### Credit
By: Dionne Searcey and Constant Méheut
Source: The Washington Post
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 weakening of the U.S. dollar could benefit companies that export products and services, while importers may have to pay more for the goods they bring in, leading them to hold off on purchases. However, a more stable dollar can benefit both importers and exporters.
European shares edge higher and the dollar remains strong as investors await remarks from the heads of the Federal Reserve and European Central Bank at a conference in Jackson Hole.
The dollar is expected to continue strengthening as bond yields rise, with the Fed likely to hike rates at least once more this year, and a barrage of economic data this week will heavily influence Fed policy decisions and impact the direction of the dollar and interest rates.
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 Indian rupee is expected to strengthen against the US dollar due to weaker-than-expected US job openings, causing a decline in the dollar index and Treasury yields.
The euro reached a 15-year high against the yen due to signs of inflation in Europe, while the dollar weakened ahead of economic data that could indicate a softening economy.
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.
The Canadian dollar strengthens slightly against the US dollar in August despite concerns about China's economy and a decline in commodity-linked currencies.
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 US dollar is surging against other major currencies due to concerns over the global economy and rising oil prices.
The dollar has reached a five-month high as investors anticipate the need for elevated interest rates due to the strong US economy, with factors such as weak growth in China and Europe, rising US yields, and falling equity prices further supporting the case for dollar strength.
The rising U.S. dollar is causing concern among foreign officials and investors, but it remains uncertain if anything can be done to stop its rise or if it will negatively impact U.S. equities.
The dollar's strength is expected to be difficult to overcome for most major currencies by year-end, according to a Reuters poll of forex strategists, with risks to the greenback outlook skewed to the upside.
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 US dollar strengthens to a six-month high after data reveals that the services sector unexpectedly picked up steam last month, indicating inflation pressure and suggesting that interest rates will remain elevated for longer.
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.
The Canadian dollar strengthened against the US dollar after better-than-expected jobs data increased the likelihood of another rate hike by the Bank of Canada.
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 US dollar's dominance as the world's reserve currency is at risk due to growing debt in the US, according to economist Barry Eichengreen, highlighting the importance of controlling debt to maintain the dollar's global role.
The euro has been continuously decreasing in value against the dollar for the eighth consecutive week, reflecting the economic challenges faced by Europe, including high inflation and the specter of recession, while the United States has better control over inflation and a stronger labor market, leading to a widening gap between the euro and 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.
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.
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.
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 surge in the U.S. dollar may pose a challenge for U.S. stocks as they struggle through a losing September, creating headwinds for U.S. multinationals and tightening financial conditions.
The U.S. dollar is gaining strength, causing concerns about interest rates and negatively impacting the S&P 500.
The Euro has recovered from the psychological level of 1.0500 against the US Dollar, supported by USD weakness, but the sustainability of the move is uncertain.
The US Dollar struggles to find demand after losses against major rivals, as data on inflation from the Euro area and the US will be closely watched.
The US dollar maintains its dominant position as the leading global currency, with a 58.9% share of global currency reserves, despite a gradual decline over the past 20 years.
The GBP-USD exchange rate has been highly volatile, with the pound nearly hitting parity with the dollar, reaching a 16-month high, and then plummeting to a six-month low, reflecting a combination of factors including the Bank of England's monetary policy decisions, the UK's economic performance, and the strength of the US dollar as a safe-haven asset.
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.
Despite contracting UK economic data, the GBP/USD rebounds due to a weakening US Dollar and positive market sentiment.
Surging U.S. real yields are strengthening the dollar's rebound and making it more profitable to bet on the currency, while also increasing the cost for bearish investors to bet against it.
The dollar weakened and global equities dipped as investors grappled with U.S. unemployment data suggesting a tight labor market and the Federal Reserve's commitment to higher interest rates, while European stocks rebounded from losses.
The euro's value may fall to parity with the dollar again as US yields rise and concerns about euro-area growth and inflation persist.
