Buck has best weekly performance in 6 months
The U.S. Dollar is trading in stronger ranges across the board after a week that lifted its value to the highest overall level since the start of August, according to the Bloomberg Dollar Spot Index (BBDXY).
This week’s central bank action set the tone for a USD resurgence, primarily driven by the Federal Reserve’s unanimous decision to hike interest rates by 25 basis points.
Stock futures look positive, although global markets are generally quieter than at the start of the week, when Brent crude oil prices hit a four-month high, U.S. 10-year Treasury bond yields reached a nineteen-year high, and doubts over artificial intelligence development dominated headlines. Ultimately, investors and traders feel that inflation can be reined in, and that confidence has translated into the best weekly gain so far for the BBDXY since the beginning of March.
While the buck tries to sustain momentum, markets are watching for developments in the Middle East, as well as the European Union’s efforts to cooperate more closely with Canada on trade and other matters. Geopolitical developments will remain a wild card, as weekends are often busy with shifts in the narrative. Domestically, the main data points to watch later today are August industrial production and manufacturing output at 9:15 a.m.
What to Watch This Week…
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JPY
The Japanese yen is dropping against the buck following a relatively “dovish” take on the Bank of Japan’s monetary policy decision. As widely expected, the BOJ voted to increase interest rates by a quarter of a percent, bringing the rate to 1.25%; however, the split vote of 7-2 caused the currency to depreciate. The dissent led economists to wonder whether the BOJ’s tightening will be able to keep up with the Fed’s. BOJ Governor Kazuo Ueda said no options were off the table for the next few meetings. The yen’s value is at its weakest since September 2nd.