ForEx Marked Update

Foreign Exchange Report 16/10/23

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,,The Dollar came off recent highs but remained close to a one-week top against the Euro and Sterling on Monday as risk sentiment was fragile. At the time of writing the single currency was up 0.13% at $1.05265, after falling to a one-week low of $1.0496 on Friday. Whereas the Pound rose 0.13% to $1.2160, following Friday’s one-week low of $1.2123 and the Dollar index declined 0.07% to 106.49. “I view what's going on in Israel as a regional conflict, which typically does not have meaningful impacts on financial markets over time,” according to David Chao, Invesco's global market strategist for Asia Pacific ex-Japan. “I don't see it altering growth trajectories of the major economies nor does it make the Fed more hawkish. If anything, I think the Fed is less inclined to tighten going forward given the perception of heightened risks."

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The Israeli Shekel fell to more than an eight-year low of 3.99 per Dollar following statements on Sunday by the country's Prime Minister, Benjamin Netanyahu?vowing to “demolish Hamas” as his troops readied to move into the Gaza Strip. The Shekel has dropped more than 3% against the greenback since the attack on Israel by Palestinian group Hamas on 7th October.

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In Japan, the Yen was up 0.1% at 149.39 per Dollar, moving away from the 150-mark.? Certain traders forecast a higher likelihood of intervention by Japanese authorities to support the currency should it move past that level.

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The Australian Dollar edged up 0.45% to $0.63255 after falling 1.4% last week, whilst the New Zealand Dollar increased 0.65% to $0.5923. The country’s centre-right National Party led by Christopher Luxon will establish a new government with its favoured coalition party ACT, as Prime Minister Chris Hipkins said his Labour Party couldn’t gorm a government following the general election on Saturday. “The Kiwi Dollar jumped... following a clear and decisive victory of New Zealand's opposition National Party,” said Kyle Rodda, senior financial market analyst at Capital.com. “It appears the Nationals are in the position to win power while only requiring one coalition partner, excluding the populist New Zealand First party. The Kiwi has jumped on the prospect such dysfunction has been avoided.”

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Elsewhere, South Africa’s Rand was stronger against the Dollar in early Monday trade, at 18.9500 against the greenback at the time of writing, around a 0.4% gain over the previous close. “There are lots of stresses in global financial markets which risks spilling into rand volatility, but USD/ZAR looks happy around 19.00 and potentially range-bound for the next few weeks,” according to Rand Merchant Bank analysts.

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In India, there was little change for the Rupee despite weakness in other Asian currencies, as likely USD sales from the Reserve Bank of India bolstered the local currency. The Rupee was trading at 83.2550 against the Dollar at the time of writing and held within a range between 83.25 and 83.2650 on Monday.''

report by Jonathan Lock

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