USD DEMAND. AUDUSD BEARS ARE READY
The U.S. dollar climbed to its highest level against the Japanese yen in more than 2 decades.
The European Central Bank has a monetary policy announcement in less than 24 hours. Still, halfway through the week, persistent demand for U.S. dollars continues to be the primary driver of currency flows.
The Federal Reserve’s aggressive tightening this year is the main reason for robust dollar demand, but the prospect of quantitative tightening (QT), which is the opposite of quantitative easing (QE), caused investors to shrug off mixed data and step up their purchases this month.
Last month the central bank laid out a plan to reduce its balance sheet starting on June 1st. The QT process involves capping the amount of reinvested principal payments, allowing more bonds to mature on their designated date.
Inflation data is also scheduled for release on Friday, and everyone is worried about heady price growth. Policymakers have been on the wires lamenting about high prices, and according to Treasury Secretary Janet Yellen, 8% inflation is just unacceptable.
We have every reason to believe that the CPI report on Friday will reinforce the need for aggressive and urgent action from the Fed.
Tonight’s Chinese trade report should not significantly impact Australian and New Zealand dollars. While the COVID lockdown will negatively impact exports, the appreciation of the dollar and euro boosts the value of China’s overseas holdings.
This week, the Australian dollar has seen very little demand after the Reserve Bank of Australia’s rate hike. AUD is likely to weaken the most if stocks sell off and the U.S. dollar continues to rise.
This is an article not Financial Advice always do your own research
If you have questions you can write it in the comments below and I will answer them
And please don’t forget to support this idea with your likes and comments
The European Central Bank has a monetary policy announcement in less than 24 hours. Still, halfway through the week, persistent demand for U.S. dollars continues to be the primary driver of currency flows.
The Federal Reserve’s aggressive tightening this year is the main reason for robust dollar demand, but the prospect of quantitative tightening (QT), which is the opposite of quantitative easing (QE), caused investors to shrug off mixed data and step up their purchases this month.
Last month the central bank laid out a plan to reduce its balance sheet starting on June 1st. The QT process involves capping the amount of reinvested principal payments, allowing more bonds to mature on their designated date.
Inflation data is also scheduled for release on Friday, and everyone is worried about heady price growth. Policymakers have been on the wires lamenting about high prices, and according to Treasury Secretary Janet Yellen, 8% inflation is just unacceptable.
We have every reason to believe that the CPI report on Friday will reinforce the need for aggressive and urgent action from the Fed.
Tonight’s Chinese trade report should not significantly impact Australian and New Zealand dollars. While the COVID lockdown will negatively impact exports, the appreciation of the dollar and euro boosts the value of China’s overseas holdings.
This week, the Australian dollar has seen very little demand after the Reserve Bank of Australia’s rate hike. AUD is likely to weaken the most if stocks sell off and the U.S. dollar continues to rise.
This is an article not Financial Advice always do your own research
If you have questions you can write it in the comments below and I will answer them
And please don’t forget to support this idea with your likes and comments
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