[Sponsored Content] How much higher will the US dollar go?
The US Federal Reserve’s monetary policy tightening cycle is likely to be short and sharp, with two 50-basis-point hikes taking place in June and July. This will take the federal funds rate (FFR) towards 1.75% by end-July, with further hikes remaining on balance as the US Fed takes a pause-and-wait approach.This approach by the Fed would be similar to the June 1999-May 2000 period of a tightening cycle, suggesting that the FFR could eventually settle around 1.75% to 2%
A The US Federal Reserve’s monetary policy tightening cycle is likely to be short and sharp, with two 50-basis-point hikes taking place in June and July.for the latest news you need to know..A (May 28): Firmer consumer spending and a decisive narrowing of the merchandise trade deficit show the US economy is emerging in short order from a first-quarter pothole.
This will take the federal funds rate (FFR) towards 1.75% by end-July, with further hikes remaining on balance as the US Fed takes a pause-and-wait approach.Michelle Bachelet’s long-planned trip this week took her to the far-western Xinjiang region, where the United States has labelled China’s detention of a million Uyghurs and other Muslim minorities a “genocide.This approach by the Fed would be similar to the June 1999-May 2000 period of a tightening cycle, suggesting that the FFR could eventually settle around 1.75% to 2% and fall short of the terminal rate that the market is currently pricing in excess of 2.The top US diplomat reiterated his country’s stance that Chinese authorities would not allow Bachelet full access during her long-planned trip, saying the United States was “concerned” about China’s “efforts to restrict and manipulate her visit.5%.5% annualised decline in first-quarter GDP — shrank last month by the most since 2009.
We believe that if the Fed intends to avoid a hard landing or a possible recession, a pause-and-re-evaluation scenario by the Fed will play out after the Federal Open Market Committee meeting in July.She said the trip was a chance for her to speak with “candour” to Chinese authorities as well as civil society groups and academics.A pattern of monetary policy tightening similar to June 1999-May 2000 would indicate that the US 10-year Treasury yield may need to unwind the excessive tightening that it is currently being priced in.For the US dollar (USD), a pattern of monetary policy tightening that is short and sharp, as in June 1999-May 2000, would suggest the USD is near its peak.‘Warned not to complain.The risk is the strength of the USD comes off beyond the July period.Thus, the current market pricing would need to be calibrated eventually to unwind the excessive tightening that is being priced via the USD.“The High Commissioner should have been allowed confidential meetings with family members of Uyghur and other ethnic minority diaspora communities in Xinjiang who are not in detention facilities but are forbidden from travelling out of the region.7% on an inflation-adjusted basis.
This will eventually give regional Asian currencies, particularly the USD/MYR (Malaysian ringgit), leeway for a change in directional trend from its current upward trajectory.Based on the current correlation, we note the US Dollar Index (DYX) and the US 10-year Treasury yield have continued to edge higher, moving in lockstep as financial conditions via the foreign exchange (FX) and the rates market tighten.“Resignation is the only meaningful thing she can do for the Human Rights Council,” said Dilxat Raxit, spokesperson for the World Uyghur Congress advocacy group, while US-based Uyghur activist Rayhan Asat called it a “total betrayal” on Twitter.The risk is a possible pullback in either market instruments — the US 10-year Treasury Yield or DYX — once the market has fully priced in rate hikes of 50bps in June and July by the Fed.For the MYR, the recent decision by Bank Negara Malaysia (BNM) to raise rates would put a ceiling on the currency from coming off significantly.Her office later clarified that her remarks did not contain a direct endorsement of China’s rights record.The topside of 4.The “report makes clear that consumers continue to consume despite facing the highest inflation in 40 years”, Wells Fargo & Co economists Tim Quinlan and Shannon Seery wrote in a note.
40 to 4.Beijing denies the allegations and says it is offering vocational training to reduce potential for Islamist extremism.45 is deemed an overshoot, and we believe the decision by BNM will be seen as positive for the local currency.The retrace in USD/MYR could take the pair gradually on an intraday basis towards 4.350, 4.300 and eventually towards our end-2022 target of 4.In April, sales of new homes plummeted the most in nearly nine years, according to government data on Tuesday (May 24).
100 over the medium term.For the major currencies, the Japanese yen (JPY) has been susceptible to weakness on the back of divergence in monetary policy between the Fed and the Bank of Japan (BoJ).However, we believe over the medium term, the BoJ will eventually need to normalise interest rates, thus putting a ceiling on the JPY that will prevent it from further weakness.Similar action is likely to play out for the euro, whereby we believe the European Central Bank would need to adjust interest rates higher, putting a floor on it from weakening further.In the risk-sensitive currencies, we note the Australian dollar (AUD) has stabilised, following the recent hike by the Reserve Bank of Australia (RBA) that provides a floor for the AUD from breaching below the significant 0.Other measures of how hot the market is, including a house’s time on the market and the percentage of homes selling above listing prices, had also plateaued, Redfin Corp data showed.
700 level on the downside.Further rate hikes are in store.For the market, the decision by the RBA to raise interest rates has, to a large extent, signalled the intention that it is normalising monetary policy.For the pound sterling, we note that a raising of rates by the Bank of England (BoE) puts a floor on the currency from breaching the significant support line of 1.200.It’s less clear, however, whether businesses later this year will reconsider the current pace of investment in the face of higher interest rates and an anticipated cooling of economic growth.
We believe with further rate hikes in store by the BoE, the upside for the British pound remains in the near term.On balance, we believe though the Fed is aggressive on its rate tightening stance, the recent decision by the BoE and RBA to raise rates eventually provides investors with an opportunity to engage in relative value trades.Investors who want to capture the FX opportunities or hedge against currency fluctuations can set up an RHB Multi Currency Account* that allows them to store up to 24 foreign currencies on top of the Malaysian ringgit.Users can enjoy attractive conversion rates for the currency of their choice to take advantage of price fluctuation.The currency conversion is fast and seamless, where the user can convert one currency to another instantly via RHB Internet Banking and the RHB Mobile Banking App.58 billion) in April.
For investors who are keen to invest in FX-related products, our relationship managers and investment specialists stand ready to work with you to design an effective investment strategy to meet your long-term investment goals.*Deposit products are protected by PIDM up to RM250,000 for each depositor.MCA Gold Investment and MCA Silver Investment are not protected by PIDM.RHB is a member of PIDM..
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