- The US dollar index has lost to 99.60, as the Taiwanese dollar has spread the largest jump in the day for more than 30 years.
- The PMI Services ISM climbs to 51.6 in April, overlooking the estimates and reading March 50.8.
- Treasury Minister Besin says commercial deals may be reached this week,; Low deficit.
- Market activity remains thin with holidays in China and the United Kingdom.
The US dollar index (DXY), which measures the value of the US dollar against a basket of currencies, recorded light gains on Monday as the Taiwan dollar rose by more than 5 %. This step has sparked a broader gathering in Asian currencies amid speculation of FX transfers by exporters. The markets remained thin with many public holidays that affect liquidity.
Daily Digest Market Movers: The deterioration of the US dollar on Move Taiwan Fx alplis
- US Treasury Secretary Scott Bessin said that the United States may end some commercial deals early this week, which caused optimism.
- Pesin expressed their confidence that 17 commercial partners, with the exception of China, made “very good” proposals under review.
- The Secretary expects that American economic growth will return to 3 % by this time next year if the current plans are implemented.
- He mentioned a target to reduce the expectations of the Congress budget office and reduce the federal deficit by about 1 % annually.
- Bessent pointed out a strong special credit growth as a sign that American banking regulations are very narrow and need to adjust.
- He also pointed out that China has made only general offers in commercial negotiations, with no special developments in particular.
- The increase in the Taiwanese dollar, the largest, the largest since the early 1990s, has caused a widespread sale of the US dollar in the Asian FX market.
- The exporters in Taiwan are believed to convert the US dollar holdings in anticipation of a local currency that is estimated to ensure commercial gains.
- According to the Taiwan-USA negotiations, its first official meeting on May 1, although there are no results.
- The market activity was unusually thin, as China and the United Kingdom closed for holidays, which exacerbated foreign fluctuations.
- The PMI Services ISM rose to 51.6 in April, overlooking the reading and analysts in March, indicating the constant American service sector activity.
- The recruitment index from the same report rose to 49.0, indicating some improving the labor market in the service industry.
- The paid index jumped to 65.1, which raised fears that basic inflation may remain sticky despite the latter alleviating in the main numbers.
- Despite the positive ISM data, the US dollar index decreased, and it was pressured by the external FX dynamics and expectations of the high federal reserve rate.
- Traders are increasingly confident that the Federal Reserve will retain fixed rates at 4.25 % to 4.50 % at the next meeting.
Technical analysis
The DXY index is currently trading at 99.93, an increase of 0.08 % per day, in a daily range from 99.46 to 100.05. The momentum remains neutral with the RSI index of 40.84, while the average medium rapprochement (MACD) is a purchase signal. However, simple moving averages 20, 100 and 200 days-at 100.13, 105.38 and 104.39, respectively, all indicate the continued decline. Additional declining pressure comes from Emas for 10 days and 30 days, which sits at 99.77 and 101.09. The main support is located in 99.60, with resistance at 99.77, 100.08 and 100.13.
Questions and answers in US dollars
The USD (USD) is the official currency of the United States of America, and a “reality” currency for a large number of other countries where there is a circulating alongside local notes. It is the most trading currency in the world, as it represents more than 88 % of the rotation of global foreign currencies, or on average $ 6.6 trillion in transactions per day, according to data from 2022. In the aftermath of World War II, the United States took over the British pound the world reserves. For most of its history, the US dollar was backed by gold, even the Bretton Woods agreement in 1971 when the golden standard went.
The most important individual factor that affects the value of the US dollar is the monetary policy, which is formed by the Federal Reserve (Fed). The Federal Reserve has two states: to achieve price stability (control of control) and enhance full employment. Its primary performance to achieve these two goals is to adjust interest rates. When prices rise very quickly and inflation is 2 % higher than the Federal Reserve goal, the Federal Reserve will raise rates, which helps the value of the dollar. When inflation decreases to less than 2 % or the unemployment rate is very high, the Federal Reserve may reduce interest rates, which weighs to green.
In maximum situations, the Federal Reserve can also print more dollars and quantitative mitigation (QE). QE is the process that the Federal Reserve increases significantly from the flow of credit in a suspended financial system. It is a measure of the non -standard policy used when the credit is dry because banks will not lend to each other (for fear of failing to pay the opposite end). It is the last resort when it is unlikely to achieve interest rates simply the necessary result. The Federal Reserve is the preferred to combat the credit crisis that occurred during the great financial crisis in 2008. It includes the printing of the Federal Reserve more dollars and their use to buy US government bonds mostly from financial institutions. QE usually leads to the weakest US dollar.
The quantitative tightening (QT) is the opposite process in which the Federal Reserve stops buying bonds from financial institutions and does not invest the manager from the bonds he holds in new purchases. It is usually positive for the US dollar.
