America's FX news : USD sells off as traders tilt toward slower growth
The declines in the greenback were supported by the US yields which moved lower (and are well off their recent cycle highs). Admittedly, the yields are off the lows for the day but are still negative.
The dollar weakness may also be a function of tighter monetary policy abroad. Canada’s producer price index came in much higher than expected today and is likely to keep the Bank of Canada firmly in a tightening mode. Meanwhile, in Europe, the beaten-down EUR has gotten some relief from ECB policymakers who were a bit more anxious to start the tightening cycle (with chatter of even if 50 basis point move).
Traders may also be discounting slower growth in the US going forward as a result of a quicker Fed ramp-up in rates. The playbook is designed to lower inflation expectations from the demand side of the equation versus the supply side which the Fed cannot control (i.e., supply chain from China lockdown and port issues, oil rise from Ukraine war, a housing market that has supply issues as well). Traders may also be discounting slower growth in the US going forward as a result of a quicker Fed ramp-up in rates. The playbook is designed to lower inflation expectations from the demand side of the equation versus the supply side which the Fed cannot control (i.e., supply chain from China lockdown and port issues, oil rise from Ukraine war, a housing market that has supply issues as well).
Economic data today was weaker: Traders may also be discounting slower growth in the US going forward as a result of a quicker Fed ramp-up in rates. The playbook is designed to lower inflation expectations from the demand side of the equation versus the supply side which the Fed cannot control (i.e., supply chain from China lockdown and port issues, oil rise from Ukraine war, a housing market that has supply issues as well).
Economic data today was weaker:
Initial jobless claims came in higher 218K vs 200K estimate Philadelphia that index was weaker 2.6 versus 16.0 expected. The Empire State index released earlier this week was also much weaker than expectations Existing home sales were also marginally lower (down for the 3rd month) although supply remains a concern and prices remain elevated. Initial jobless claims came in higher 218K vs 200K estimate Philadelphia that index was weaker 2.6 versus 16.0 expected. The Empire State index released earlier this week was also much weaker than expectations Existing home sales were also marginally lower (down for the 3rd month) although supply remains a concern and prices remain elevated. Economic data today was weaker:
Initial jobless claims came in higher 218K vs 200K estimate Philadelphia that index was weaker 2.6 versus 16.0 expected. The Empire State index released earlier this week was also much weaker than expectations Existing home sales were also marginally lower (down for the 3rd month) although supply remains a concern and prices remain elevated.
In the US equity markets today, the Dow industrial average opened lower and was the biggest decliner today but recovered off of their low levels. The NASDAQ index traded above and below the unchanged levels and above and below its 50% midpoint of the range since the pandemic low. That midpoint level since March 2020 comes in at 11449.29. The price is closing just below that level which tilts the bias marginally to the downside.
The dollar weakness may also be a function of tighter monetary policy abroad. Canada’s producer price index came in much higher than expected today and is likely to keep the Bank of Canada firmly in a tightening mode. Meanwhile, in Europe, the beaten-down EUR has gotten some relief from ECB policymakers who were a bit more anxious to start the tightening cycle (with chatter of even if 50 basis point move).
Traders may also be discounting slower growth in the US going forward as a result of a quicker Fed ramp-up in rates. The playbook is designed to lower inflation expectations from the demand side of the equation versus the supply side which the Fed cannot control (i.e., supply chain from China lockdown and port issues, oil rise from Ukraine war, a housing market that has supply issues as well). Traders may also be discounting slower growth in the US going forward as a result of a quicker Fed ramp-up in rates. The playbook is designed to lower inflation expectations from the demand side of the equation versus the supply side which the Fed cannot control (i.e., supply chain from China lockdown and port issues, oil rise from Ukraine war, a housing market that has supply issues as well).
Economic data today was weaker: Traders may also be discounting slower growth in the US going forward as a result of a quicker Fed ramp-up in rates. The playbook is designed to lower inflation expectations from the demand side of the equation versus the supply side which the Fed cannot control (i.e., supply chain from China lockdown and port issues, oil rise from Ukraine war, a housing market that has supply issues as well).
Economic data today was weaker:
Initial jobless claims came in higher 218K vs 200K estimate Philadelphia that index was weaker 2.6 versus 16.0 expected. The Empire State index released earlier this week was also much weaker than expectations Existing home sales were also marginally lower (down for the 3rd month) although supply remains a concern and prices remain elevated. Initial jobless claims came in higher 218K vs 200K estimate Philadelphia that index was weaker 2.6 versus 16.0 expected. The Empire State index released earlier this week was also much weaker than expectations Existing home sales were also marginally lower (down for the 3rd month) although supply remains a concern and prices remain elevated. Economic data today was weaker:
Initial jobless claims came in higher 218K vs 200K estimate Philadelphia that index was weaker 2.6 versus 16.0 expected. The Empire State index released earlier this week was also much weaker than expectations Existing home sales were also marginally lower (down for the 3rd month) although supply remains a concern and prices remain elevated.
In the US equity markets today, the Dow industrial average opened lower and was the biggest decliner today but recovered off of their low levels. The NASDAQ index traded above and below the unchanged levels and above and below its 50% midpoint of the range since the pandemic low. That midpoint level since March 2020 comes in at 11449.29. The price is closing just below that level which tilts the bias marginally to the downside.
(Reporting by AJFX Limited, Editing by Shivangi Jadav)
