Foreign Currency Update

Foreign Currency Update.

The U.S. Dollar rose after the Federal Reserve cut interest rates for the first time in almost a decade, but at the same time signaled that it may be just a mid-cycle adjustment. Market participants scaled back their expectations of further rate cuts during the year. 10-year treasury yields rose from 1.95 per cent to 2.14 per cent, but quickly fell back to a low of 1.68 per cent after trade war worries took center stage. The DXYDollar index, an index that measures the U.S. Dollar’s value against a basket of major currencies movedfrom 97.04 to hit a high of 98.54 before falling back to 97.02.Against the Thai Baht,the U.S. Dollar gave up some ground moving from 30.88 to 30.22, indicating continued Baht strengthening. The Baht remains one of the strongest performing currencies in Asia this year.

The Pound dropped even further, and the pace of the decline had been picking up speed. After breaking 1.2500 against the U.S. Dollar, the next support at 1.2280 gave way and the pound traded all the way down to 1.2090. This held for a short while and was broken again with the pound falling to 1.2025 before bouncing back to 1.2290. There is not much historical support below these levels except the fuzzy bottom of the infamous 2016 flash crash at between 1.1985 and 1.1800. Yet, sharp upward movements also can’t be ruled out. Even a whisper of good news on the Brexit front could send the pound markedly higher. Against the Thai Baht, the Pound dropped from its already 23-year low at 38.34 to move further down to 36.96, before recovering somewhat to 37.56.

The U.S. Dollar vs. Japanese Yencross rate moved rapidly from 109.23 to 105.39, as stock markets sold off in the wake of additional US-China tariffs. This is in keeping with the Yen’s safe haven status at times of stock market drops. The Japanese Yen vs. Thai Baht spot rate moved from 0.2838 to 0.2890 further indicating the strengthening of the Japanese Yen

The Russian Ruble remained flat for most of the month trading at 63.05 to the U.S. Dollar, but moved to 65.24 in the latter part of the period. This move was mirrored in the RUB/THB cross rate, which moved from 0.489 down to 0.4705.

The Euro / U.S. Dollar cross-rate dipped from 1.1261 to 1.1038 as news of the Federal Reserve meeting was released, but stabilized soon after and then rose back to 1.1211. This was even despite news from the ECB that it was prepared to lower interest rates down even further from their already negative position in the near future. Against the Thai Baht, The Euro was down again due to Baht strength, moving from 34.76 to 34.08.