Dollar Stems Losses as Investors Eye US Midterms
USD Losing Grips in Forex Markets
Forex markets particularly with regard to USD aren’t steady and in fact, falling because of several factors prevailing in the US economy.
Currently, investors are restraining themselves from putting their funds into USD as they are more concerned about upcoming midterm elections in the US.
Earlier, a huge downward impact was seen in the global forex markets when China decided against the suggestion that it will reduce Covid restrictions.
Negative Sentiment Expected In USD
As regards the elections in the US, the word is that Republicans will come as winners by obtaining a majority in the House of Representatives. Resultantly, a gridlock is expected in Congress.
The outcome of the mid-term results could boost markets pertaining to bonds but a negative sentiment is expected in the USD.
Damien Boey of Barrenjoey commented that if gridlock happens then Fed’s Chairman would be forced to take his foot off the interest rate accelerator.
Because of the interest rate increase although yields have been made by the US Treasury. Back-to-back inflation increases also led the USD to see its value getting bigger and bigger against other major fiats.
Now the market sentiment is that the upward trend for the USD will soon near its inevitable end.
Other Currencies against USD in the Markets
On 8th November 2022, Euro was able to see its value increase, and 1 GBP was traded at $1.0031.
However, the Sterling failed in acquiring any gains and instead saw its value reduced by 0.43% i.e. $1.14655.
Thanks to the Swedish crown and the Australian dollar, the Pound was able to prevent itself from falling below its recent past lows. Resultantly, USD’s index is trending down and currently tracking at 113.5.
Kenneth Broux, Societe General’s strategist commented that the USD has been able to get back to its highs even though the terminal rate has been revised. Broux predicted that the USD would no longer move up for the time being.
Against USD, JPY is also showing performing solidly and has been able to see its value going up about 146.15 against USD.
Earlier in October, JPY saw a massive value decline which was due to the Japanese Government’s $43 Billion spending for providing support to its national fiat.
There is yet an additional factor that has been impacting the USD for the past couple of days.
The US economy was hoping that China will decide to ease up its Covid restrictions, however, China refused to bring about any change in the policy.
On the other hand, the Chinese Yuan was able to see the historic day on 4th November 2022. Yuan managed to secure record-breaking gains which it had last seen two years ago.
Currently, Yuan is trading at 7.2612 against one USD.