Global Market Snapshot 21st October 2024

This week, global foreign exchange markets have seen increased volatility. Although the U.S. dollar has pulled back slightly, it remains generally strong. The dollar is supported by Federal Reserve policies and U.S. economic data, while the Japanese yen and the euro continue to be under pressure due to weak domestic economic conditions in their respective countries.

After five consecutive days of gains, the U.S. Dollar Index ultimately fell by 0.3%, closing at 103.49. Nevertheless, the dollar performed strongly throughout the week, on track for a third consecutive weekly gain, with an increase of around 0.6%. So far this month, the Dollar Index has risen by 2.7%, marking its largest monthly gain since February 2023. This upward trend has been primarily driven by solid U.S. economic data and adjustments in expectations regarding Federal Reserve policies.

USDJPY pair briefly broke through the 150 level, reaching its highest point since August, before retreating by 0.5% reaching at 149.51. Despite the pullback, the dollar still gained around 0.8% against the yen, and has risen by 4.6% this month, marking its largest monthly gain in a year and a half. The yen’s weakness is largely attributed to Japan’s sluggish domestic economy and continued monetary easing policies. Meanwhile, the increasing likelihood of former U.S. President Trump winning the upcoming election has also provided support for the dollar.

GBPUSD This week, the British pound rose by 0.2% against the U.S. dollar, reaching at 1.3042. The increase was mainly boosted by better-than-expected UK retail sales data for September, which indicated that the UK economy still shows some resilience. However, the pound’s gains were limited as market expectations for accelerated rate cuts by the Bank of England remain strong. Easing inflation pressures in the UK have led the market to bet that the central bank may cut rates twice by the end of the year.

EURUSD This week, the euro rebounded by 0.3% against the U.S. dollar, reaching $1.0865, marking the euro’s first notable rise since late September. However, the euro remains generally weak, having declined by 2.7% for the month, its largest drop since May. The European Central Bank (ECB) cut interest rates by 25 basis points last Thursday as expected, reflecting increasing economic pressure in the eurozone. The market widely anticipates that the ECB may cut rates again in December.

USDCAD Canadian dollar performed relatively strongly, boosted by China’s stimulus measures and a global stock market rebound. As a commodity-linked currency, the Canadian dollar is highly sensitive to the health of the global economy. Recently, stable oil prices have provided some support for the loonie, though concerns about the Canadian economy persist. The market is expecting a potential 50-basis-point rate cut. Economists have noted that the easing of inflationary pressures in Canada gives the central bank room to lower rates, but the future direction of monetary policy after the rate cut remains uncertain.

BTC Bitcoin has broken through the critical $69,000 level. As the largest cryptocurrency by market capitalization, Bitcoin has risen by more than 60% year-to-date.