The US dollar starts what promises to be an eventful week giving back some the gains score in second half of last week against the euro and yen. Equity markets are extending their pre-weekend losses. Commodities are also trading with a heavier bias. Markets in Australia, New Zealand, and Italy are closed for national holidays.
The World Bank and International Monetary Fund (IMF) have teamed up to address the issue of climate change. Their latest plan involves using economic leverage in harmony with the technical assistance of private organizations to effect changes that the United Nations simply cannot achieve on its own.
Nations around the world have begun to sign the Paris agreement on climate change. The Paris agreement was an initiative led by the United Nations by which the nations of the world are supposed to reduce their respective emissions of greenhouse gases.
It is not that the US dollar had a particularly good week. It was mixed. The best performers were sterling and the Canadian dollar. The pound led with a 1.6% gain, followed closely by the Canadian dollar.
The last week of April is eventful. The Reserve Bank of New Zealand, the Federal Reserve and the Bank of Japan hold policy meetings. The UK, Eurozone, and the US provide the first estimates of Q1 GDP. Japan, the Eurozone, and Australia report consumer prices, while the US updates the Fed’s preferred (targeted) inflation measure, the core deflator of personal consumption expenditures.
Signed in 1951, the US–Japan Security Treaty and the alliance it established have endured for over six decades and continue to play an instrumental role in shaping the regional security order. However, with Republican presidential nominee frontrunner Donald Trump’s ‘America first’ isolationist foreign policy views gaining traction in the United States, concerns are mounting over the future of the alliance.
There seems to be a pushback against trade agreements in the post-global financial crisis era. The Trans-Pacific Partnership (TPP) was signed in early 2016, but US presidential candidates have spared no effort criticizing it so near-term ratification is highly uncertain.
The WTO Doha Round is in the deep freeze after 14 years of negotiations. Unilateral trade liberalization has virtually come to a standstill.
The US dollar has had a rough few months. It has fallen against most major and emerging market currencies this year. A critical issue for global investors and policymakers is whether the dollar’s uptrend is over, or is this just a respite. Much is at stake with the answer.
Equity markets are seeing this week’s gains trimmed after the S&P 500 fell 0.5% yesterday, recording its biggest loss in two weeks. Disappointing earnings in some tech leaders spurred profit taking. The US 10-year Treasuries are consolidating the week’s nine basis point increase in yields after nearing 1.90% yesterday. Asian bonds yields tracked US Treasury yields higher while European bonds are narrowly mixed as they consolidate yesterday’s increase.
The ECB meeting is the session’s highlight. In recognition of the risk that ECB President Draghi expresses displeasure with the premature tightening of financial conditions through the exchange rate channel is encouraged a modest bout of euro selling. The single currency has drifted back toward the lows seen at the start of the week near $1.1275.
The US dollar has been largely confined to yesterday’s ranges against the major currencies. China’s yuan slipped lower for the first time in four sessions, while the Shanghai Composite fell 2.3%, the most since the end of February.
