The US Dollar has extended its weakness and has lost some more ground in the last few weeks with the DXY Dollar index, (an index that measures the dollar’s strength compared to a basket of other currencies), moving from 96.5 to a low of 93.5 before recovering to 94.2. Against the Thai baht, the US Dollar also weakened from 33.66 to move to 33.39. Of note is that the Euro has had much to do with the USD weakness with the basket of currencies making up the DXY index weighted with 52% of Euro trades with in it. Further weakening cannot be ruled out but the pace of declines may slow for some choppy consolidation to come.
The British pound rose as high as 1.3120 to the USD on hawkish views from some central bank members, but took a dive to 1.30 as a consolidation move took hold. A recovery has lead to break of 130.40. Against the Thai Baht, the rise was mirrored but somewhat dampened by the effect of the weaker US dollar rates already in place. The pound moved from 43.3 to 44.3 only to drop back to 43.5. More sideways movement is expected as a confluence of economic data and Brexit news hits the newswires. Expect the spread at currency exchange booths to be high due to continued volatility.
The USD/JPY cross retested 114.38 to the U.S. Dollar and dropped quite quickly back to 111.12 and then further to 110.69. If a drop in stock markets takes place then the Yen may regain its status as a safe haven currency and inflows could be seen which would take the exchange rate lower. (The more expensive the yen the less yen can be bought with the dollar so the exchange rate moves down on yen buying). For those expecting a drop back to 108 and below then the current moves look enticing. Yet there are plenty of market participants expecting a return to 114 and above. Against the Thai baht the yen remains in a tight range between 0.306 and 0.301 after briefly dipping below the 0.300 mark.
The Russian ruble weakened against the US Dollar from 58 to hit 60.5 recovering slightly to 0.598. Against the Thai Baht it has dropped quite sharply from 0.582 to 0.55. Volatility has increased and the boundaries of the recent range have expanded again. Recent news about Russia and the US may have dented the Ruble somewhat but the oil price is also a driver of the economy and affects the currency. The oil price has come under pressure although to be fair it has been quite volatile and has put on some days of good strength as well as weakness in the last few weeks.
The Euro has been flying high, moving from 112 to 114.48 then on to 116.66, much of the last part of the move was due to Mario Draghi’s press conference which tried unsuccessfully to portray a dovish stance on EU monetary policy.
Against the Thai baht the Euro moved up from 38.26 to 38.9, briefly touching 39.1