Foreign Exchange Report
ForEx Report Monday 19/09/2022
,,The Dollar remained close to a 20-year high against major rivals on Monday. The Dollar index – measuring the greenback against six peers – rose 0.2% over Friday at 109.84, consolidating after a shaky fortnight that saw it reach 110.79 on 7th September for the first time since 2002. Investors have rushed to price in higher interest rates in the U.S. and a stronger Dollar, as consumer prices have remained persistent. As it stands, at least another rate rise of 75 basis points has been priced in by markets at this week’s Fed meeting, with a 19% chance of a full percentage point rise. "The Dollar can remain elevated as the (Fed) continues to hike aggressively and on growing global recession risks," and could hit a new cyclical peak above 110.8, according to Commonwealth Bank of Australia strategists. They added that the poor economic outlook will keep the Pound, Euro and pro-cyclical currencies such as the Australian Dollar under pressure, the strategists said. Moreover, the Dollar held firm at 143.15 Yen on Monday, under robust resistance at 145, Reuters reports, as policymakers have stepped up the rhetoric on currency intervention. Whereas the Chinese Yuan remained on the weaker side of 7 per Dollar as economic fears and the likelihood of more rate cuts emerge on Tuesday.
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Elsewhere, Sterling fell 0.2% to $1.1403, just over a 37-year bottom of $1.1351 reached on Friday. Markets are divided as to whether the Bank of England will hike rates by 50 or 75 basis points at Thursday’s meeting. The UK’s new finance minister Kwasi Kwarteng is set to unveil an emergency mini-budget on Friday, that is set to provide more details about the support to fight Britain’s cost of living crisis.?
In addition, the Euro dipped below parity to $0.9995, with little reason for investors to be cheerful as the energy crisis looks set to tip Europe into recession, the Reuters report adds. Moreover, the Australian Dollar dipped 0.2% to $0.6710, not too far away from the low of $0.6670 reached on Friday, a level not seen since the middle of 2020. The New Zealand Dollar was trading at $0.5974 at the time of writing.''