Foreign Exchange Report - 11.04.2022

Rising U.S. yields helped the Dollar stand tall in Asian trading on Monday, whereas Japan’s Yen briefly hit a low of 124 per Dollar, last down 0.5% at 124.86. The Bank of Japan is holding yields near zero, whilst in contrast Treasury yields are surging. The benchmark 10-year yield rose an additional seven basis points to hit 2.77% on Monday, as the Federal Reserve prepared to hike interest rates. "There's nothing there to frighten people out of Dollar/Yen positions," according to National Australia Bank's head of foreign exchange Ray Attrill. "So onwards and upwards for Dollar/Yen."?

Elsewhere, tension over strict lockdowns in China was felt across markets on Monday, with a decline in commodity prices and commodity currencies as well as Chinese equities, Reuters reports. Ten-year Treasury yields surpassed their Chinese counterpart for the first time in 12 years whilst the Yuan moved down 0.1%.

The Euro stood its ground bolstered by a sense of relief the far right didn’t win the first round of voting in the French presidential elections. The single currency reached a high of $1.0955 in early trade on Monday, before standing around 0.1% higher than the close on Friday at $1.0883. The Pound to Euro rate stood at 1.1957, having moved above the 1.20 mark on Friday, Pound Sterling Live reports. Around 96% of votes have now been counted from the first round. Emmanuel Macron gained 27.41% of the votes, whilst his far-right challenger Marine Le Pen won 24.03% of votes, resulting in an election runoff on 24th April. A win for Le Pen may send shockwaves throughout France and Europe.

In addition, investors are preparing for a European Central Bank (ECB) meeting on Thursday. Although there may not be any indications given surrounding rate hikes, there will likely be further details of a tapering in asset purchases. Moreover, a consumer report is due out of the U.S. on Tuesday, expected to show 8.5% inflation, piling the pressure on the Fed. After breaking the 100-mark on Friday, the U.S. Dollar index was at 99.923.

Furthermore, there were declines for both the Australian and New Zealand Dollars in Monday trade. The Aussie dropped to a three-week low of $0.7418, whilst the Kiwi edged down 0.3% to $0.6831. Sterling also fell 0.15% to $1.3015.

Interested in finding out how we can help you get the most from your funds? Drop me a message to schedule your complimentary financial?review.