Currency Forwards and Option Hedging Strategies Rise with Soaring US Dollar

The US dollar has risen about 15% against a basket of currencies over the last year with rising U.S. interest rates and safe haven flows. The higher greenback has reduced the profits of U.S. multinational companies that convert foreign currency into dollars, multinationals such as Coca-Cola Co, Procter & Gamble and Philip Morris International are just some seeing an impact. The US dollar is at a two-decade high against the Japanese yen, up 13% this year. Against the Euro is … Continue reading “Currency Forwards and Option Hedging Strategies Rise with Soaring US Dollar”

Japanese Yen Weakest Major Currency Against US Dollar in 2022

Rising U.S. interest rates and safe haven flows have seen the U.S. dollar soar in 2022. The American 10-yr yield rose six basis points to 3.12%, hitting a fresh high for the year while the 2-yr yield fell five basis points to 2.67%. The US Dollar Index (DXY) hit a 20-year high, the highest levels since 2002. The weakest component of the index has been the Japanese yen, sliding around 12 per cent against the dollar and underperforming even weak … Continue reading “Japanese Yen Weakest Major Currency Against US Dollar in 2022”

Japan Adds to Bond Route Selling Treasuries as Currency Hedging Costs Soar

Bonds have collapsed at a rapid pace with soaring inflation and a one-way market. The US dollar has soared at the same time with the BOJ and the Fed Reserve at difference policy ends. The Japanese Central Bank still is an aggressive buyer of JGB’s while the Fed pares its $9 trillion balance sheet. Japanese institutional managers are now selling US bonds, BMO Capital Markets shows they have offloaded almost $60 billion over the past three months. One could argue this … Continue reading “Japan Adds to Bond Route Selling Treasuries as Currency Hedging Costs Soar”

US Dollar Hits 20 Year High in April on High Rates and Safe Haven Flows

The U.S. dollar has soared with safe haven flows as geopolitical fears grip the world and interest-rate increases from the Federal Reserve. US Dollar Index (DXY) hit a 20-year high, the highest levels since 2002. The Greenback reached multiyear highs against the euro, the British pound and the yen in April with the positive rate differentials, a huge part of the dollar’s strength. A strengthening dollar also tends to weigh heavily on emerging markets currencies, a rising dollar makes dollar-denominated … Continue reading “US Dollar Hits 20 Year High in April on High Rates and Safe Haven Flows”

Swiss National Bank’s Zurbruegg Says Not Focus of Monetary Policy to Curb Risk to Financial System Vulnerabilities

The Swiss National Bank Vice Chairman Fritz Zurbrügg in a speech in Geneva Tuesday said the focus of monetary policy is price stability and economic developments, and not curbing financial system vulnerabilities”. He added “Moreover, we have observed an increase in affordability risks over recent years.” “In Switzerland, vulnerabilities in the residential real estate and mortgage markets have increased since the onset of the pandemic,” Zurbruegg said in a speech in Geneva. “Moreover, we have observed an increase in affordability risks … Continue reading “Swiss National Bank’s Zurbruegg Says Not Focus of Monetary Policy to Curb Risk to Financial System Vulnerabilities”

Japanese Yen and Swiss Franc Attract Flight To Safety Bids on Virus Fears

The Japanese yen and the Swiss franc received safe haven bids on Friday as the global markets panicked on news of the Covid Omicron variant. In a thin market it also gave traders an opportunity to book profits after an extended rally in the US dollar. On the flip side commodity beneficiaries and the growth sensitive Australian dollar and Norwegian krone sold off. Moves weren’t just against the dollar. Whilst the euro rose 0.97 percent to a high of US$1.1312, … Continue reading “Japanese Yen and Swiss Franc Attract Flight To Safety Bids on Virus Fears”

Fitch Warns United States Could Lose ‘AAA’ Over Political Brinksmanship Over Debt Limit

Rating agency Fitch warned debt limit games could put US AAA rating at risk. If US debt limit were not raised or suspended in time, political brinksmanship and reduce the financing flexibility could increased risk of sovereign default United States of America at ‘AAA’

Europe Postpones Free Trade Agreement Negotiations with Australia

The European Union has postponed the next round of negotiations for a free trade agreement with Australia for a month. The move clearly is in retribution for the cancellation of the French $90 billion submarine contract.

Germany SPD and CDU Battle To Become Largest Party in Bundestag After Angela Merkel Era

Centre-left SPD and their candidate, Olaf Scholz, secured a narrow win in the German election which saw Angela Merkel’s centre-right CDU party and their candidate, Armin Laschet, plunge to a historic low. Parties will embark on “exploratory talks” to form a government, with a three-way coalition considered the most likely.