Global Market Snapshot 23th September 2024

This week, the forex market has experienced significant volatility, with the movements of major currency pairs heavily influenced by central bank decisions and economic data. The US dollar strengthened overall due to a dovish rate cut by the Federal Reserve, while the yen came under pressure as the Bank of Japan maintained its accommodative stance. The British pound rose after being boosted by retail data following the Bank of England’s decision to hold rates steady, whereas the euro remained relatively weak. Commodity currencies such as the Canadian dollar and Australian dollar were also affected by shifts in risk sentiment.

The US Dollar Index saw a slight increase this week, closing at 100.75 points, near its one-year low. On Wednesday, the Federal Reserve announced a 50-basis point rate cut, marking the beginning of a new cycle of monetary easing. Although rate cuts typically weaken the dollar, market expectations of further rate cuts from the Fed actually boosted the dollar’s performance.

USDJPY This week, the US dollar reached a two-week high against the Japanese yen, peaking at 144.50 yen, marking a 0.92% gain. The Bank of Japan kept its interest rate unchanged at 0.25% and indicated that it is not in a hurry to raise rates again amid rising global economic uncertainties. Bank of Japan Governor Kazuo Ueda emphasized in a press conference that the central bank’s monetary policy decisions would be based on “economic, price, and financial developments”, further reinforcing market expectations that the Bank of Japan will maintain its accommodative policy for an extended period.

GBPUSD The British pound performed strongly this week, rising 0.24% against the US dollar to 1.3318. On Thursday, the Bank of England announced that it would keep interest rates unchanged and stated that it would take a cautious approach to future rate cuts. This dovish stance initially put pressure on the pound, but the release of strong retail sales data later boosted market sentiment.

Nevertheless, significant uncertainty remains around the UK’s economic outlook. Bank of England stated that future monetary policy would depend on the evolution of economic data, particularly inflation and employment figures. Therefore, while the pound was lifted in the short term by strong retail data, the medium- to long-term outlook remains one that should be approached with caution.

EURUSD The euro edged down 0.01% against the US dollar, closing at $1.1159. While the Federal Reserve’s dovish stance provided some support for the euro, it did not change the currency’s overall weakness. The European Central Bank also kept interest rates unchanged at last week’s meeting, which limited the euro’s ability to rebound amid a strong US dollar. Concerns about the eurozone economy persist, particularly with weak data from key economies like Germany. Whether the euro can effectively rebound in the future will depend on improvements in eurozone economic data and further clarity on the Federal Reserve’s policy trajectory.

BTC Cryptocurrency-related stocks listed in the U.S. experienced a significant surge in pre-market trading today, driven by the Federal Reserve’s decision to lower interest rates by 50 basis points. This move has prompted investors to shift towards higher-risk assets, potentially reigniting interest in Bitcoin, which saw a 5% increase, has broken through the $64,000 mark.