The euro continues to be the underdog against the US dollar. The yen is losing on the FX market, approaching the level of 153 against the USD. The Hungarian central bank is holding back from further rate cuts, with the aim of supporting the HUF.
Heading towards 1.07?
The week is decidedly under the influence of the American currency, with an appreciating move being observed on almost all major pairs tied to the USD. The same applies to EUR/USD, where the support level of 1.08 has been broken. We are currently in the region of the minimum from the 1st of August, and if this is overcome, the exchange rate may fall to around 1.07. Pro-dollar factors remain the same – a cooling of expectations for monetary easing in the near future and Trump’s growing advantage in the race for president. To the detriment of the euro is primarily a rather bleak vision regarding the economic prospects in the eurozone. It is increasingly mentioned that there will be no soft landing, and our continent will face a recession, which is already visible among our western neighbors. Moreover, the chance of the ECB cutting rates by 50 basis points in December is increasing. Such a scenario has not been considered so far.
Significant weakening of the JPY
The USD is not just winning in the pair with EUR. Significant movement is also visible on the USD/JPY quotation, where we are approaching around 153, with over a 2% increase this week. Political factors also play a role. On the one hand, the potential (albeit still uncertain) victory of Trump works in favor of the USD. On the other hand, the problems of the ruling party in the country of the blooming cherry, which is losing in the polls and may lose power, are a minus factor for the JPY. Hence, the movement on USD/JPY is justified. We can also mention the lack of suggestions from the BoJ about potential rate increases. This issue has heated investors, and the JPY significantly gained in a short time, falling against the USD even down to the level of 140. A silence on this subject now produces the opposite effect and a huge doubt whether a cost of money increase is possible in the short or even medium term, which intensifies the sell-off of the Japanese currency.
Help- Line for HUF
Yesterday, the Hungarian Bank held its decision-making meeting and kept interest rates unchanged at 6.5%. This is the second pause in this cycle of monetary easing and it is often said that it was also a concession towards the sensitive HUF of late. If we look at inflation, which was 3% in September, and for the first time in almost 4 years was in the target, it’s difficult to identify a reason for taking a break right now. It is often said that when EUR/HUF exceeds the level of 400, the Hungarian Bank pulls the brake and does not decide to continue easing, so as not to cause further weakening of its own currency and foster uncertainty. Today’s schedule includes the Bank of Canada’s decision regarding the cost of money (baseline scenario of a 50 point cut), and at 20:00 the Beige Book Fed.
Author: Krzysztof Pawlak, currency analyst Walutomat.pl
The post Dollar on the wave – weakening euro, yen and forint under global factor pressure first appeared in CEO Magazine.
Source: https://ceo.com.pl/dolar-na-fali-slabnace-euro-jen-i-forint-pod-presja-globalnych-czynnikow-65414
