Foreign Currency Update

Foreign Currency Update.

TheU.S Dollar rose on the back of generally hawkish comments from the Federal Reserve. The DXY Dollar index, (an index that measures the US Dollar’s valueversusa number of other major currencies), rose from 95.23 to hit a high of 97.51 before dropping back to 96.29. The move was in keeping with a rise in interest rates on the 2-year and 10-year bonds, although these rises have dissipated somewhat. Yields on the 10-year treasury re-tested a 7-year high of 3.24 per cent,forming a double top, before dropping back to 3.06 per cent. Further rises for the U.S. Dollar can’t be ruled out but much of the unfolding story remains in the Fed’s hands. Against the Thai Baht, the U.S. Dollarremained in a tight range of 32.72 to 33.23, indicating that the Thai Baht has also strengthened along with its U.S. counterpart.

The British Pound has seen some wild swings. When there has been good news on Brexit, this has propelled the pound higher whilst uncertainty about both Brexit and the UK political outlook has often been behind the Pound’s falls.So far, the Pound has traded between the wide band of 1.2729 and 1.3080 against the U.S. Dollar, with most of the period held close to the lower part of the trading range. Once again a keen eye on the Brexit story is warranted. Against the Thai baht, the pound was trading at between 43.08 and 42.37, at one point touching a low of 41.94. The possibility of further sharp moves going forward cannot be ruled out.

The U.S. Dollar vs. Japanese Yen cross rate has beenmuch less volatile of late, remaining in a narrow range of between 112.37 and 113.99. Overall the rate was generally flat even in spite of a stronger dollar indicating that the Yen has also strengthened. This may have occurred do to the Yen’s safe haven status in times of stock market weakness. Against the Thai Baht, the Yen has also been relatively flat, moving from 0.2930 to 0.2875 and reversing back to hit 0.2908

The Russian Ruble has seen volatility at very low levels with the currency trading within a 0.5-ruble range for much of the last month. Apart from a short-lived spike for a few days where the ruble hit 68.12 to the U.S. Dollar, the Russian unit moved gently for the rest of the time between 65.64and 66.11, a very tight trading range. Against the Thai baht the Ruble strengthened slightly to sit in the range of 0.49 to 0.50.

The Eurovs. the U.S. Dollar cross rate has seen some extra volatility of late. It moved from 1.1517 to 112.21 in short order before recovering to 1.1438. The Brexit story could be starting to affect the Euro but other news such as the budget in Italy could also be behind the moves. Against the Thai baht the Euro weakened from 37.81 to a low of 37.01 before retracing higher to reach 37.64.