Currencies: $ recovers, SNB pushes Swiss franc down
(CercleFinance.com) – The dollar emerged stronger from today’s trading session (after Wednesday’s bank holiday), thanks in particular to a sharp rise in US T-Bond yields.
The $-Index climbed +0.30% to 105.6, its highest level since June 14 or May 6.
The greenback’s yield is soaring: +12pts on the ’10-yr’ to 4.272%, +5pts on the ‘2-yr’ and ’30-yr’ to 4.75% and 4.405% respectively.
The euro is down -0.33% at 1.0705, the yen -0.45% at 158.75 (it is once again close to its historic lows.
The pound sterling is also down -0.45% at 1.2660 after the BoE’s unsurprising decision to maintain rates (no reaction).
The recent slowdown in inflation in the UK, which last month reached the 2% target set by the central bank, is nonetheless beginning to fuel speculation about a forthcoming rate cut.
‘The signals sent out by the British economy are contradictory’, stress analysts at Oddo BHF, who on the one hand point to ‘robust’ growth and rising wages and service prices, but also to a rising unemployment rate and a job market ‘close to an inflection point’.
The most volatile currency was the Swiss franc (-0.75% against the dollar, -0.40% against the euro), while the SNB (Swiss National Bank) cut its key rate by 0.25% to 1.25%, which was expected given the moderation in inflation (and the +2% rise against the euro over the past 10 days).
The Swiss 10-year yield eased by -2.5pts to 0.635%, the 6-month yield by -10pts to 1.0900%, and the 1-year yield by -11pts to 1.13%, proof that the SNB still has some “room to run” in the eyes of the markets between now and the end of 2024.
The dollar was strengthened by the release of several US statistics in the afternoon, in particular the Philly Fed index, which fell by 3 points to +1.3 this month.
The new orders sub-index remains negative but is improving, from -7.9 in May to -2.2 in June.
The employment sub-index improved from -7.5 to -2.5, while the prices paid sub-index rose by +4 points to 22.5.
According to the survey, more than 32% of companies surveyed said they expected business to increase over the next six months, 19% a decline and 47% stable.
The latest figures for housing starts were mediocre: they fell by -5.5% to 1.277 million, compared with the consensus target of 1.37 million, after 1.35 million in April.
Building permits also fell, to an annualized rate of 1.386 million in May in the US, after 1.44 million in April (the consensus was for stability).
Registrations for unemployment benefits fell by -5,000 to 238,000, but this was slightly less than expected, the consensus having been for -8,000 to 235,000.
Forex traders are now awaiting statements from 2 members of the Fed to determine whether or not the recent figures published argue for a shift in Jerome Powell’s “vigilant” stance on inflation.
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