Daily Market Update

U.S. Dollar Thrives, Except Against Yen

February 22, 2018

The U.S. Dollar sustained gains from yesterday’s session based on a positive reaction to the FOMC Minutes.

USD

Mixed data out of Europe created and opportunity for the greenback to climb this week and the overall optimistic analysis of the Fed’s meeting notes aided the currency further.

Officials noted the economy is growing, but want to see stronger advancement in inflation and wages. Thus far, February is looking like the dollar-recovery mode that we predicted with the Bloomberg Dollar Spot Index indicating almost a 1.0% uptick for the month.

Initial Jobless Claims continue to go down and remain near a four-decade low. We shall see if any headlines get in the way of the dollar’s progress as we have to wait until next week to see major indicators such as Durable Goods Orders and GDP growth.

 

JPY

The Yen has exploded, rising 5.8% thus far in 2018 as Japan has handled potential threats admirably, solidified its political environment, and chosen to remain on the path of caution. Equities have been all over the place these first two months of the year, which have once more guided investors towards the safe-haven. The Bank of Japan remains supportive of the economy and may be headed towards tightening, but only if it deems it necessary.

Witnessing the inconsistency in economic indicators around the most advanced regions of the world recently, the Japanese officials have been adamant not to act quickly and create further obstacles to lending, borrowing, and overall credit access. We foresee more room for growth as the divergence in economic performance keeps JPY as a desirable asset.

 

GBP

The Pound is suffering, for now, as it swung down after disappointing Gross Domestic Product figures. The British economy grew at a measly pace 0.4%, failing to reach the 0.5% estimate.

Economically, the U.K. has yet to experience major turmoil since the Brexit referendum, but little by little the negative items keep accumulating to paint an ugly future. Higher unemployment in the face of thousands of jobs potentially leaving and a slowdown in GDP could be signs of havoc ahead. Sterling is resilient, but for how long?

 

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