Greenback hits multi-month highs and lows
JANUARY 09, 2020
The U.S. Dollar is trading in mostly favorable ranges this morning following the market’s perception of de-escalation from possible conflict after the U.S. President spoke of a stand-down and potential for diplomacy in combating ISIS.
Stock indexes climbed across the globe from a mix of hope there is indeed a chance for peace with the addition of sanctions and optimism China will agree to sign a first phase trade agreement with the U.S.
One exception to the buck’s stability is the Mexican Peso, which climbed despite a poor run for oil prices that saw WTI Crude fall below $60.00/barrel. On the other hand, other Petro-currencies such as the Canadian Dollar did feel a negative impact. The rise for Peso, the best level since April, and other emerging market currencies can be credited to fewer chances of war as well as accelerated stock growth in developing regions.
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The Japanese Yen has depreciated by 1.2% in the last five days and is trading near its weakest ranges since May. The rise of gold as a new go-to safe-haven plus a less chaotic and growing global economy are factors contributing to the recent weakening.
Although outlooks for growth have been revised downward several times, risk-appetite remains high and the Yen is paying the toll. A stagnant economy growing at a quarterly pace of just 0.4% in Japan also makes the tender less attractive than other Asian assets.
Sterling took a hit overnight as remarks from central bankers bring a sense of pessimism over Brexit. Current Bank of England Governor Mark Carney explained that officials are debating if the economy deserves a stimulus package that should be considered and implemented while separation is in process.
“The economy has been sluggish,” was Carney quoted in discussing how slack has defined the past year. Carney’s blessing for further quantitative easing comes after recent committee votes showed continued dissidence from two officials that pushed for additional aid as well as cuts to the benchmark interest rate, standing at 0.75%.