Nearly a week after that “dovish hike” from the Federal Reserve, the US dollar continues reeling. That decision had five dollar downers which continue echoing.
But looking more in detail, the greenback is suffering against some currencies more than against others. Here are quick updates.
- EUR/USD: The world’s most popular currency pair is settling above the 1.08 level, getting closer to the 1.0830 level – the high of 1.0870. The driver for the single currency is Macron’s good performance in the first televised debate. Markets prefer the centrist over extremist Le Pen which wants a referendum on “Frexit,” a French exit of the euro-zone. Opinion polls asking about voting intentions show slightly stronger support for the young candidate, but it is a bit too early to celebrate. Beyond 1.0830, it’s 1.0870, a high seen in December.
- GBP/USD: The pound is getting close to 1.25. Sterling rides on the high inflation read, which shows that the BOE’s hawkish tilt last week is justified. Governor Mark Carney seemed to dismiss this read, but the weakness of the dollar also helps. 1.2540 is the next level of resistance, followed by 1.2620.
- USD/JPY: This major currency pair reflects the ebb and flows in the US dollar, but the yen also moves according to risk. And the risk is off: stock markets are falling. The usually stable S&P 500 is down around 1%, and the “risk-off” supports the safe-haven yen.
The dollar fares a bit better against commodity currencies: USD/CAD is only slightly lower, with the Canadian dollar riding higher on upbeat retail sales data. AUD/USD and NZD/USD are quite stable, not going anywhere fast.
Will this continue? At this moment, the US dollar will need some positive data from the US or something positive from Trump, which has a weaker influence on markets than in late 2016.
More: Is the EUR/USD rally nearing its end? Two views
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