Summary:
Yen eyes a fourth weekly drop vs. the dollar as investors seek higher yields. Weakest G10 currency in 2024, with fewer rate cuts expected elsewhere.
EBC Forex Snapshot, 23 Feb 2024
The yen headed for a fourth weekly drop against the dollar on Friday as investors chased higher yields. It has been the worst performing G10 currency this year as less rate cuts are now priced in elsewhere.
Goldman Sachs no longer expects a Fed’s interest rate cut in May and see four 25-bp cuts this year after Governor Christopher Waller said he need to see a few more months of data to affirm price stability.
Positioning data shows yen shorts jumped last week. At the two-year tenor, the gap in yield between Japanese and US government bonds is more than 450 bps, which prompts carry trades funded by the currency.
| Citi (as of 5 Feb) | HSBC (as of 23 Feb) | |||
| support | resistance | support | resistance | |
| EUR/USD | 1.0724 | 1.1139 | 1.0715 | 1.0910 |
| GBP/USD | 1.2487 | 1.2827 | 1.2554 | 1.2736 |
| USD/CHF | 0.8333 | 0.8728 | 0.8696 | 0.8895 |
| AUD/USD | 0.6500 | 0.6900 | 0.6464 | 0.6618 |
| USD/CAD | 1.3379 | 1.3552 | 1.3399 | 1.3574 |
| USD/JPY | 146.09 | 148.80 | 148.46 | 151.72 |
The green numbers in the table indicate that the data has increased compared with the previous time; the red numbers indicate that the data has decreased compared with the previous time; and the black numbers indicate that the data has remained unchanged.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
The dollar held gains and rose slightly in Asia Monday as Japan's holiday cut liquidity, focusing attention on China's disappointing stimulus.
2024-10-14
The US dollar dipped from a two-month high but is set for a second consecutive weekly gain as weak labor market signals support faster Fed rate cuts.
2024-10-11
The US hovered near a two-month high on Thursday as markets grew confident in the Fed's patient monetary policy ahead of a key inflation report.
2024-10-10
