Buck keeps advancement as safe haven, Stocks down
The U.S. dollar continues to trade in favorable ranges across the board, as oil prices put pressure on markets globally and enthusiasm over artificial intelligence investment fades.
A.I.-linked firms saw their shares plummet as discussions about the dangers of the technology affected overall sentiment. The lack of confidence is worrisome, as the industry has led stock indices to record highs. Meanwhile, the yield on U.S. 10-year Treasury bonds rose above 5.0%, a psychological level that concerns economists, as it marks the highest rate seen in about nineteen years. Some traders and analysts feel the financial environment could improve if we get clarity from the Fed tomorrow, as well as good Q3 earnings, but for now, the mood is sour.
Dollar strength has helped bring the Buck’s value to its highest level since the start of September. Now at the midpoint, central banks will be crucial in determining its direction, particularly with the Bank of Japan meeting scheduled for Friday. Major economic indicators will be released starting tomorrow, but today we will get ADP Employment Change for the final week of August at 8:15 AM and a survey on New York activity via the Empire Manufacturing release at 8:30 AM.
What to Watch This Week…
- Fed Meeting and Presser on Wednesday 2PM
- Bank of Japan Decision on Friday
- USA Online is always open
The complete Economic Calendar can be found here.
EUR
The Euro remains stuck at its weakest level against the U.S. dollar since mid-August, but there could be some good news preventing further deterioration. Considering the energy crisis and the effects of armed conflict in the Middle East, as well as on the Eastern front, any signs that a ceasefire can be achieved are welcome developments for the eurozone economy. Ukraine’s President Volodymyr Zelenskiy said yesterday that his administration was ready to support a U.S.-backed proposal for a Russia-Ukraine ceasefire involving energy sites. This “infrastructure truce” could indeed help alleviate some of the supply crunch, but some experts remain skeptical. Nevertheless, European leaders are hoping something can materialize to begin a path toward peace after years of war.
JPY
The Japanese yen is losing a bit of ground but is not terribly far from trading around its strongest levels since February after reaching that zenith last week. If the Bank of Japan raises interest rates as expected on Friday, it would mark the third increase in just ten months, the fastest pace of interest-rate hikes since 1990. A surprise hold on rates would certainly cause plenty of shock, as it would put the BOJ at odds with determined interventionist U.S. Treasury Secretary Scott Bessent. Contractionary monetary policy, such as raising rates, should lift the yen’s value. It would be curious if it did not.