Volatility has been the name of the game in the foreign exchange market in recent times and the forex news has been shaping up with some important movements in the FX market this month.
In various global locations, political upheavals and central bank decisions have been leaving their mark on the forex market.
We take a look at the latest developments.
The Latest Forex News: U.S. Dollar Gains Amid Political Turbulence
According to the latest forex news, the US greenback has recently climbed higher, spurred by safe-haven flows as investors process US President Joe Biden’s sudden announcement to withdraw from his 2024 re-election bid.
It would be an understatement to say that this has caused some volatility in the currency markets. Investors are bracing for more of the same.
Helen Given, an FX trader at Monex USA, told Bloomberg: ‘There’s a slight bid to the dollar because there was a small haven bid after the big political news yesterday … [but] markets are mostly shrugging it off and stepping back a little bit, so it’s still a political risk event that markets are trying to protect against.’ Biden’s endorsement of the vice president, Kamala Harris, apparently has also stirred the cauldron.
Even Goldman Sachs now believes Biden would only have a slim majority in the House of Representatives and only a tie in the Senate.
The dollar index rose 0.1% to 104.3. However cautious the optimism might be, traders are still feeling it.
The Latest Forex News: Central Bank Meetings in Focus
In the latest forex news, the monetary policy meeting of the Federal Reserve is eagerly awaited.
This meeting is expected to give some clues about the interest-rate movements. The Bank of Japan’s meeting is also awaited, as it is due to raise interest rates.
This is something that the markets are watching closely and will affect exchange rates accordingly. Money markets are already priced for the Fed to cut rates in September. The dollar has already slipped 0.4% against the yen, which is at 156.82 at present.
The Latest Forex News: European Central Bank’s Stance
The European forex news from today shows that the European Central Bank (ECB) is being cautious. Following the ECB policy meeting this week, the bank failed to counteract rising market expectations of a rate cut in September, which has been weakening the euro. The currency is down slightly against the dollar this morning at $1.0875.
This is because they see it as reflecting a high chance that the ECB will follow through on market pricing and cut rates.
The euro has been dragged lower by the dollar, in part on this dynamic.
The Latest Forex News: Chinese Yuan and Economic Adjustments
Moving to Asia, the latest news in foreign exchange markets reveals that the People’s Bank of China (PBoC) unexpectedly cut the seven-day reverse repo rate to 1.7% from 1.8%, ‘to smooth market operations and support the real economy’, which was followed very soon by cuts to the one- and five-year loan prime rates.
The offshore yuan, which depicts the policy change, firmed 0.1% to 7.295 against the dollar. These moves are signs that China is taking proactive steps to bolster its economy amid global uncertainty.
The Latest Forex News: Australian Dollar and Market Reactions
The Australian dollar was also in the headlines in recent forex news. It dropped 0.8% to US$0.6631, reversing a rally that had been triggered by Biden’s announcement that he was leaving the presidential race.
Forex markets prove that politics in one part of the world can have repercussions on another half a world away.
The Australian dollar is now in the news as currency investors are watching how it will react to policy decisions made later this month by the Reserve Bank of Australia.
The Latest Forex News: Cryptocurrency Market Developments
Beyond that, the latest forex news shows that the cryptocurrency space is bracing itself for the launch of exchange-traded funds (ETFs) tracking ether, the world’s second-largest cryptocurrency, which is seen as a vote of confidence.
But market players are not expecting the kind of huge inflows that bitcoin ETFs received when they launched Darius Tabai, CEO at Vertex, said: ‘Whether the ether ETF brings in a lot of new money, or whether it becomes a place where people park money, I don’t know.’ Ether was down 1.6% at $3,450, while bitcoin slipped to $66,894.
The Latest Forex News: Canadian Dollar and Oil Prices
The latest foreign exchange news also talked about the Canadian dollar, which fell to a five-week low against the US dollar, partly due to a rise in speculators’ net short position in the currency before the Bank of Canada sees more reason to ease interest rates.
‘The CAD’s attention this week will be squarely on Wednesday’s BoC policy decision, where a 25 bps (basis points) cut is pretty much fully priced in at this point,’ observed Shaun Osborne, chief currency strategist at Scotiabank.
The Bank of Canada is expected to lower its benchmark rate by a quarter of a percentage point to 4.50% after fresh data showed inflation easing and retail sales slipping last month.
The Latest Forex News: Sterling and Economic Indicators
Meanwhile, the latest forex news sees the British pound edge upwards.
The currency market is waiting to see what the Bank of England’s monetary path will be after the S&P Global Composite Purchasing Managers’ Index is due out. Inflation figures last month were higher than anticipated, but the pound appears to be holding up.
Sterling was up 0.05% at $1.2935, having hit its highest level since July 2023. Strategy pages said the British currency still looked more attractive than other “risky” currencies, because of its less direct exposure to the Chinese economy compared with the Australian dollar, and because it had a more stable political outlook than the eurozone.
As we can see from the current forex news, the forex market is in a constant state of flux. Political developments in the US as well as central bank decisions around the world are just a few of the many factors that can move the markets.
The latest forex news can help to prepare traders for the ever-changing landscape of the forex market and can help them navigate through its sometimes turbulent waters. Looking ahead, the latest forex news will continue to provide important information and updates for all market participants.
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