The U.S. Dollar
Recent U.S. Dollar strength was short-lived and has quickly reversed as the Greenback notched up steady losses. Interest rates on the 10-year note leveled off from recent highs of 1.74 per cent back down to 1.59 per cent, yet this may be a temporary move. The DXY Dollar index, the index that measures the U.S. Dollar’s value against a basket of major currencies, fell relentlessly from 93.31 to 90.07, a move of more than three per cent. Against the Thai Baht, the U.S. Dollar rose from 30.69 and has been largely range bound between 31.16 and 31.57. Typically if the U.S. Dollar weakens then one U.S. Dollar should buy less baht, not more. The move in the USDTHB exchange rate indicates that the Thai Baht is weakening even faster than the U.S. Dollar.
The British Pound
The British Pound pierced the 1.40 mark against the U.S. Dollar and traded above 1.4245, a three-year high, before retreating slightly to 1.4191. Thus there is notable resistance at this level and the low volatility of recent action could portend a sharp move either way in the future. Against the Thai Baht, the Pound rose from 42.75 to 44.56, in keeping with the weaker local currency.
The Japanese Yen
The Japanese Yen strengthened against the U.S. Dollar from 110.86 to 107.72 before rebounding back to 109.76. When the USDJPY rate falls, this indicates a rise in the value of the Yen since a dollar buys less Yen than it did previously. U.S. Dollar weakness is most likely to be behind the move, but the Yen has weakened also, just not to the same extent. With stock markets still notching up new highs there has been no flight to safety to the Yen in this respect, however if there is a sell-off in equities then the Yen could strengthen further. Against the Thai Baht, the Yen rose slightly from 0.2798 to 0.2811
The Russian Ruble
The Russian Ruble moved from 77.61 to 73.11 against the U.S. Dollar. The large move is in keeping with that of the U.S. Dollar’s weakness, but is still considered low volatility for the Russian unit. As well, since this was Dollar driven, the price action of the Ruble itself could be seen as only slight appreciation in real terms. Against the Thai Baht the Ruble moved from 0.411 to 0.425.
The Euro moved up almost in a straight line from 1.1729 against the U.S. Dollar to hit 1.2249 before retreating slightly to 1.2189. Whilst ECB and Federal Reserve heads both remain dovish, inflation numbers on both sides of the Atlantic are being closely watched. Against the Thai Baht, the Euro rallied from 36.62 to 37.89.