Monday, January 9, 2017

Dollar retreats from 14-year highs, investors unpack Fed minutes

dollar
 
As the value of dollar fell against euro and yen the investors became cautious regarding increase in bets on greenback without any hints with respect to the economy of U.S. and the hike in rate of interest. The very first day of trading in 2017 for several investors was full of expectations as they met with U.S. manufacturing data which was way different from the previous days. Since, the depreciation of dollar was the highest till date.

The Federal Open Market Committee that met in December, had warned everyone of the risk of increase in inflation after President Donald Trump’s proposal of fiscal influence standards that would shift dollar and will push up euro to $1.0499, which is its highest value declared. But as the investors changed their ways, euro started tracing profits to some extent.

Joe Manimbo, a senior market analyst at Western Union Business Solutions in Washington has intended that this decrease in the value of dollar in comparison to euro and yen have led to mixed reactions as in a way it sounds optimistic in terms of the economy, and on the other way it suggests a demoralized power of dollar.

Research have shown that the last time the value of euro increased by 0.6 percent at $1.0465. The current data shows that such a quick increase in the value of euro in December was unexpected and the surveys prove that due to this the growth in business have reached new heights in more than five years.

The dollar was last seen to be down by 0.2 percent against yen at 117.51 after an overnight hike of 118.17 yen. After Trump was elected as the President dollar has increased against many currencies with an expectation that administration under him will push up inflation, leading the Federal Reserve to follow up through a hike in rate of interest.

The Mexican peso was found to be striking the lowest level against the greenback, it fell more than 2 percent to 21.62 pesos per dollar with an intention that Trump’s policy might allow the protectionist U.S. trade policy to become a reality.

The Chinese yuan was increased to 6.8707, which was its highest value recorded against dollar since 6th December. As a result China went into both onshore and offshore markets to increase the depreciating yuan for the second time. China was also found to set the onshore middle point rate much lower than the market actually expected from it which lead many investors leaving the ground, who were intending more upcoming weaknesses in the currency, positioning in the negative direction, this was propagated by Greg Anderson, who is the global head of foreign exchange strategy at BMO capital Markets.

Thus, we can relate that how the marketing strategies as well as the position of investors are subjected to change with fluctuating value of currencies that on a longer run effects the entire economy of the country both positively and negatively.

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