The Taiwan dollar jumped 0.7% to a seven-year high of 28.935 per United States dollar. This move analysts said might be due to a combination of authorities seeking to project calm during heightened cross-strait tensions and equity inflows.
The sterling and euro are sitting toward the top of the ranges they have occupied for a couple of weeks. The sterling was last at $1.2958, and the euro was last at $1.1867.
Extending a week of solid during trepidation concerning the global economic outlook, the yen looked to break new ground. There might be a shift in the yen’s drivers as central banks pin rates around the world at or below zero.
In five consecutive weeks of gains, the yen is up nearly two percent.
Goldman Sachs analysts said in a note that the yen is deeply undervalued on standard metrics. It appears that the private sector portfolio outflows have slowed. Furthermore, the Bank of Japan seems to have little appetite for more deeply negative rates.
Dollar and Others
Analysts added that they see downside risk to their 12-month dollar/yen target of 105.
Analysts said that Federal Reserve’s lower-for-longer commitment on rates would drag on the United States dollar in the short term. Nevertheless, close attention this week will be on remarks from committee members for any more clues on the new approach to inflation.
Later this week, Federal Reserve Chairman Jerome Powell will appear before Congressional Committees. In addition, the Federal Reserve committee members John Williams, James Bullard, Raphael Bostic, Charles Evans, and Lael Brainard will make public speeches.
Terence Wu works at Singapore’s OCBC Bank. He is a strategist there.
The dovish Federal Reserve will remain a background negative for the United States dollar.
Moreover, Wu said that on Tuesday, Powell’s testimony would draw attention. Nevertheless, for now, the Federal Reserve will be done playing their cards.
That is the current news of the market.