Britain’s new finance minister on Monday (17th) almost canceled the mini-budget proposed by the Truss government, driving the pound to rebound. With the improvement in risk sentiment, the US dollar index fell by more than 1%, and the euro and the Australian dollar rebounded simultaneously.
In late New York trading, the ICE U.S. Dollar Index (DXY), which tracks the U.S. dollar against six major currencies, fell 1.08 percent to 112.09, its lowest level since Oct. 7.
Better-than-expected earnings from Bank of America (BofA) also helped boost risk appetite. The bank reported better-than-expected results for the previous quarter before the market opened on Monday, with Chief Executive Brian Moynihan saying U.S. consumer growth was slowing but still strong.
St. Louis Federal Reserve Bank President James Bullard said on Saturday (15th) that the Federal Reserve (Fed) quickly raised interest rates to drive the dollar to strengthen, however, once the level of pausing rate hikes is reached, this situation may have alleviated.
Sterling touched its highest since Oct. 5 in intraday trading on Monday and was up 1.7% at $1.1362 by press time.
The newly appointed British finance minister Jeremy Hunt recently announced the latest fiscal plan, almost overturning the mini-budget previously proposed by the Truss government, emphasizing the importance of maintaining fiscal stability and restoring market confidence.
“The pound has been the main driver of currency markets so far this month, with major policy changes announced by the UK government restoring confidence in the pound while reducing dollar buying,” said Adam Button, chief FX analyst at ForexLive.
Marc Chandler, chief market strategist of global foreign exchange at Bannockburn, believes that the pound’s record low of $1.0327 on September 26 is likely to be the bottom, and the next resistance point is expected to be $1.15.
The euro rose 1.24% to $0.9839, its highest since Oct. 6; the Australian dollar rose 1.6% to $0.6292.
The yen fell below 149 in intraday trading, rewriting a 32-year low. Before the deadline, it depreciated 0.2% to 148.95 yen against the US dollar.
Japanese authorities on Monday continued to warn markets about the yen’s weakening, pledging to take measures if necessary, after admitting to excessive exchange rate volatility at a meeting of global central banks and finance ministers last week.
As of Tuesday (18th) Taiwan time about 6:00 Price:
The dollar index was at 112.0867. -1.0602% The euro against the US dollar (EUR/USD) was quoted at $0.9842 per euro. +1.2656% GBP/USD (GBP/USD) was quoted at 1.1355 sterling. +1.5835% The Australian dollar against the US dollar (AUD/USD) was quoted at 1 AUD=0.6288. +1.5176% The US dollar against the Canadian dollar (USD/CAD) was quoted at 1.3714 Canadian dollars per US dollar. -1.3168% The U.S. dollar was quoted at 148.99 yen against the Japanese yen (USD/JPY). +0.1815%
