No trader can achieve success without keeping up with the latest Forex news, which gives traders a clue about what is happening in the currency market at the moment.
The US dollar rallied higher on Tuesday, slowly paring last night’s overnight losses against the euro, sterling, and Swiss franc.
Top Forex News: U.S. Dollar’s Impressive Rally
Wall Street rallied after the US dollar staged an overnight rally from the lows reached against the euro, sterling, and Swiss franc this morning, recovering from its lowest levels against those currencies since mid-March.
However, it was investors paring gains in other currencies ahead of a key nonfarm payrolls report due later this week.
Top Forex News: Impact of JOLTS Data on the Dollar
Despite its advance, however, the dollar pared its gains against a basket of currencies led by the euro and extended its fall versus its yen counterpart following a bigger-than-expected decline in US job openings during April.
Job openings plunged to a more than three-year low, declining 296,000 to 8.059 million on the last day of April, according to the Job Openings and Labor Turnover Survey (JOLTS) report.
Top Forex News: Market Anticipation for Nonfarm Payrolls Report
The official JOLTS update of job openings is eagerly awaited by market participants ahead of Friday’s US job report, which is expected to show job creation picked up in May, with 185,000 jobs created, up from a modest 175,000 in April.
JOLTS followed on data on manufacturing activity slowing for a second straight month and construction spending unexpectedly stalling.
Top Forex News: Dollar’s Recovery After Initial Slump
Helen Given, at Monex USA in Washington, who trades the FX markets for clients, said that while the US dollar lost a bit of ground on the more detailed JOLTS data, it had already begun to regain its composure.
‘The Fed has wanted a softening of the labor market for years and today’s JOLTS suggests that the labor market may be finally heading in the direction they want after all,’ she added.
Top Forex News: U.S. Factory Orders on the Rise
Offsetting waning job vacancies, orders for goods made in US factories rose for the third straight month in April, boosted by demand for transportation equipment.
Factory orders grew by 0.7%, easing from the revised pace of 0.7% in March.
The rise beat economists’ forecasts of a 0.6% advance.
Top Forex News: Dollar Index Movements
In late morning trading, the dollar index was up 0.2% at 104.25, having dropped overnight to the lowest since mid-April at 103.99; the euro, the dollar index’s biggest component, fell 0.3% to $1.0868.
Top Forex News: Yen Hits Three-Week High
The yen rallied to a three-week high against the dollar, with Bank of Japan officials standing guard as financial markets sensed that the era of easy money for Japan’s exporters might be coming to an end.
A story in Bloomberg said the BOJ was likely to eventually change tack and trim the pace of its bond purchases, which could cause yields to rise in the coming weeks.
If so, they could follow the US path into higher rates; a Bloomberg survey of economists says US interest rates could meanwhile reach the 2% mark and keep rising this July.
Top Forex News: Investors Unwinding Carry Trades
Meanwhile, investors are selling, or ‘unwinding’, carry trades, in addition to so-called ‘hot money’, and with good reason: they incurred serious losses after last month’s Indian rupee and Mexican peso flip-flops following unexpected election results.
In a carry trade, investors borrow low-yielding currencies such as the yen or Swiss franc so they can buy higher-yielding ones, such as the currency of an emerging market.
Top Forex News: Mexican Peso and Indian Rupee Performance
The Mexican peso inched down but was working up fewer losses than on Monday, when it shed more than 4%.
The Indian rupee was another currency under pressure against the dollar on growing fears over the prospects for the alliance led by Indian Prime Minister Narendra Modi.
Top Forex News: Sterling and Swiss Franc Movements
Sterling hit a peak since mid-March in Britain before easing 0.3% lower while the dollar also tumbled to a low since March against the Swiss franc where figures showed inflation was steady at 1.4% year-on-year in May.
Top Forex News: Commodity Currencies Under Pressure
Oil prices fell after investors fret over rising supply in the second half of the year as well as signs of softening demand in the United States.
The Australian dollar dipped 0.7% against the dollar while Norway’s crown was down 1.4%, signaling further pressure for other commodity currencies.
Top Forex News: Emerging Market Stocks and Currencies
Concern over political uncertainty saw Indian shares and emerging market stocks as a whole slide at their sharpest rate in seven weeks on Tuesday.
South African rand was rattled by the election outcome.
Top Forex News: Global Reserve Managers’ Shift to the Dollar
In their report ‘Woes pile up for China’s yuan’, the Official Monetary and Financial Institutions Forum noted that the number of global reserve managers with a rising allocation to the US dollar is on the up, while their appetite for the yuan has fallen.
Top Forex News: South African Economic Concerns
The South African rand fell more than 1% on Monday after data showed the economy shrank by 0.1% in the first quarter after a technical recession in the second half of last year.
The currency has been hampered by political uncertainties following the loss of the African National Congress in elections earlier this year.
Top Forex News: Zambia’s Debt Restructuring Vote
In the coming days, Zambia’s bondholders will vote on a $13.4 billion debt restructuring that marks the first full reworking under the G20-led ‘Common Framework’ architecture.
Top Forex News: Mexican Election Impact on Markets
The same week, Mexican stocks and the peso were sold off sharply after preliminary results of the mid-term election strongly favored the ruling party, with investors wary of constitutional reform that could take place and hurt market shares.
Top Forex News: Modi’s Narrow Victory and Market Reactions
After returns from vote counting indicated a narrower-than-expected victory for incumbent prime minister Narendra Modi’s alliance, the Indian rupee plummeted and sparked a local equities selloff.
Top Forex News: RBI’s Intervention to Stabilize the Rupee
Crucially, the Reserve Bank of India probably intervened in the market by selling dollars.
Top Forex News: Indian Equity Indices’ Significant Drop
Indian equity indices saw their worst day in more than four years as jitters over an uncertain market outcome following the elections unsettled investor sentiment.
Top Forex News: Market Confidence in New Indian Government
‘The expectation is for a reasonably stable new government in India,’ says Shreya Sodhani, a regional economist at Barclays Bank.
‘But markets might take time to ascertain and believe in the policies and reforms a new government might deliver.’
Top Forex News: Conclusion and Future Outlook
In conclusion, it is easy to say that the dollar’s rally amid global economic developments is both designed and delivered with rapidly changing factors.
Traders and investors require continual updating and creative use of the best information available at the time to facilitate their Forex knowledge and participation.
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