Dollar Falls Most in 7 Years as Fed Shock Spills Into Second Day
by
Bloomberg News
The dollar reached its largest two-day decline since 2009 on Thursday as investors recalculated the Federal Reserve’s tightening path...
The dollar reached its largest two-day decline since 2009 on Thursday as investors recalculated the Federal Reserve’s tightening path after the central bank cut forecasts for economic growth and inflation, and set a higher bar for when it may raise rates again.
The greenback fell against all of its 16 major peers in New York after Fed officials lowered their projections for rate hikes to two this year, and stressed their commitment to reaching their 2 percent inflation target, saying they need “actual and expected progress” on prices to keep pushing rates up. The yen’s strength against the dollar had fueled speculation that the Bank of Japan was checking Exchange rates with banks, a move that some traders see as a prelude to possible intervention.
"The Fed squeezed out a whole layer of dollar longs, and people are very unwilling to pile back into it," said Greg Anderson, global head of foreign-exchange strategy in New York at Bank of Montreal. "The people from other asset classes who were drawn into the long-dollar trade -- the attraction for them is not there anymore." A long position is a bet that an asset will increase in value.
The Fed meeting prompted investors to question whether the dollar’s rally has run out of steam. Until this year, the U.S. currency had outperformed most developed and emerging-market currencies as the promise of superior economic growth and rising interest rates contrasts with sluggish economic activities elsewhere. Investors are questioning whether the U.S. can escape the storm of a global slowdown unscathed and continue with a second, or even more, hikes in 2016.
The Bloomberg Dollar Spot Index, which tracks the currency against 10 major peers, was little changed at 1,182.93 as of 8:11 a.m. in Tokyo Friday, after sliding 1.1 percent in New York and reaching its biggest two-day decline since March 2009. The greenback was at 111.38 yen from 111.39 Thursday, when it lost 1 percent. The dollar’s loss was the most pronounced against emerging-market currencies Thursday, led by advances of more than 3 percent for South Africa’s rand and Brazil’s real.
“Putting a little bit more of a dovish tone into the whole statement would suggest that you’d have a much more slower gradual increase, which would suggest a weaker dollar,” said Fabian Eliasson, head of U.S. corporate foreign-exchange sales in New York at Mizuho Financial Group Inc. ‘It caught some people by surprise.”
The dollar index has weakened more than 4 percent this year, paring a 9 percent gain in 2015 and an 11 percent rally the year before.
The yen briefly pared its advance versus the dollar just after 8 a.m. in New York before resuming gains. The sudden move spurred speculations that Japan’s central bank made “rate check” calls to some banks with implicit questions on whether they planned to buy more yen.
A climb to 105 per dollar is likely to prompt Japanese officials to intervene verbally to try and talk it down, while gains past 100 could spur sales of the yen to weaken it, said Eisuke Sakakibara, the former Finance Ministry official dubbed "Mr. Yen" for his role overseeing currency intervention in the 1990s.
--With assistance from Rachel Evans To contact the reporter on this story: Andrea Wong in New York at awong268@bloomberg.net. To contact the editors responsible for this story: Boris Korby at bkorby1@bloomberg.net, Paul Cox
The dollar reached its largest two-day decline since 2009 on Thursday as investors recalculated the Federal Reserve’s tightening path after the central bank cut forecasts for economic growth and inflation, and set a higher bar for when it may raise rates again.
The greenback fell against all of its 16 major peers in New York after Fed officials lowered their projections for rate hikes to two this year, and stressed their commitment to reaching their 2 percent inflation target, saying they need “actual and expected progress” on prices to keep pushing rates up. The yen’s strength against the dollar had fueled speculation that the Bank of Japan was checking Exchange rates with banks, a move that some traders see as a prelude to possible intervention.
"The Fed squeezed out a whole layer of dollar longs, and people are very unwilling to pile back into it," said Greg Anderson, global head of foreign-exchange strategy in New York at Bank of Montreal. "The people from other asset classes who were drawn into the long-dollar trade -- the attraction for them is not there anymore." A long position is a bet that an asset will increase in value.
The Fed meeting prompted investors to question whether the dollar’s rally has run out of steam. Until this year, the U.S. currency had outperformed most developed and emerging-market currencies as the promise of superior economic growth and rising interest rates contrasts with sluggish economic activities elsewhere. Investors are questioning whether the U.S. can escape the storm of a global slowdown unscathed and continue with a second, or even more, hikes in 2016.
The Bloomberg Dollar Spot Index, which tracks the currency against 10 major peers, was little changed at 1,182.93 as of 8:11 a.m. in Tokyo Friday, after sliding 1.1 percent in New York and reaching its biggest two-day decline since March 2009. The greenback was at 111.38 yen from 111.39 Thursday, when it lost 1 percent. The dollar’s loss was the most pronounced against emerging-market currencies Thursday, led by advances of more than 3 percent for South Africa’s rand and Brazil’s real.
“Putting a little bit more of a dovish tone into the whole statement would suggest that you’d have a much more slower gradual increase, which would suggest a weaker dollar,” said Fabian Eliasson, head of U.S. corporate foreign-exchange sales in New York at Mizuho Financial Group Inc. ‘It caught some people by surprise.”
The dollar index has weakened more than 4 percent this year, paring a 9 percent gain in 2015 and an 11 percent rally the year before.
The yen briefly pared its advance versus the dollar just after 8 a.m. in New York before resuming gains. The sudden move spurred speculations that Japan’s central bank made “rate check” calls to some banks with implicit questions on whether they planned to buy more yen.
A climb to 105 per dollar is likely to prompt Japanese officials to intervene verbally to try and talk it down, while gains past 100 could spur sales of the yen to weaken it, said Eisuke Sakakibara, the former Finance Ministry official dubbed "Mr. Yen" for his role overseeing currency intervention in the 1990s.
--With assistance from Rachel Evans To contact the reporter on this story: Andrea Wong in New York at awong268@bloomberg.net. To contact the editors responsible for this story: Boris Korby at bkorby1@bloomberg.net, Paul Cox
1 week to go until FMAS:24 kicks off and we couldn't skip our interviews with some of this year's sponsors 🤩 Starting off strong with Hannelé De Necker, CEO OF IFX Brokers.
See you there!
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/
👍 Facebook: https://www.facebook.com/FinanceMagnatesEvents
📸 Instagram: https://www.instagram.com/fmevents_official
🐦 Twitter: https://twitter.com/F_M_events
🎥 TikTok: https://www.tiktok.com/@fmevents_official
▶️ YouTube: https://www.youtube.com/@FinanceMagnates_official
Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
1 week to go until FMAS:24 kicks off and we couldn't skip our interviews with some of this year's sponsors 🤩 Starting off strong with Hannelé De Necker, CEO OF IFX Brokers.
See you there!
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/
👍 Facebook: https://www.facebook.com/FinanceMagnatesEvents
📸 Instagram: https://www.instagram.com/fmevents_official
🐦 Twitter: https://twitter.com/F_M_events
🎥 TikTok: https://www.tiktok.com/@fmevents_official
▶️ YouTube: https://www.youtube.com/@FinanceMagnates_official
Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/
👍 Facebook: https://www.facebook.com/FinanceMagnatesEvents
📸 Instagram: https://www.instagram.com/fmevents_official
🐦 Twitter: https://twitter.com/F_M_events
🎥 TikTok: https://www.tiktok.com/@fmevents_official
▶️ YouTube: https://www.youtube.com/@FinanceMagnates_official
Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/
👍 Facebook: https://www.facebook.com/FinanceMagnatesEvents
📸 Instagram: https://www.instagram.com/fmevents_official
🐦 Twitter: https://twitter.com/F_M_events
🎥 TikTok: https://www.tiktok.com/@fmevents_official
▶️ YouTube: https://www.youtube.com/@FinanceMagnates_official
Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
FMAS:24 | Sneak Peak
FMAS:24 | Sneak Peak
Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/
👍 Facebook: https://www.facebook.com/FinanceMagnatesEvents
📸 Instagram: https://www.instagram.com/fmevents_official
🐦 Twitter: https://twitter.com/F_M_events
🎥 TikTok: https://www.tiktok.com/@fmevents_official
▶️ YouTube: https://www.youtube.com/@FinanceMagnates_official
Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/
👍 Facebook: https://www.facebook.com/FinanceMagnatesEvents
📸 Instagram: https://www.instagram.com/fmevents_official
🐦 Twitter: https://twitter.com/F_M_events
🎥 TikTok: https://www.tiktok.com/@fmevents_official
▶️ YouTube: https://www.youtube.com/@FinanceMagnates_official
Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
🔗 LinkedIn: https://www.linkedin.com/company/financemagnates/
👍 Facebook: https://www.facebook.com/financemagnates/
📸 Instagram: https://www.instagram.com/financemagnates_official
🐦 X (Twitter): https://twitter.com/financemagnates/
📡 RSS Feed: https://www.financemagnates.com/feed/
▶️ Telegram: https://t.me/financemagnatesnews
Don't miss out on our latest videos, interviews, and event coverage.
🔔 Subscribe to our YouTube channel for more!🔔
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
🔗 LinkedIn: https://www.linkedin.com/company/financemagnates/
👍 Facebook: https://www.facebook.com/financemagnates/
📸 Instagram: https://www.instagram.com/financemagnates_official
🐦 X (Twitter): https://twitter.com/financemagnates/
📡 RSS Feed: https://www.financemagnates.com/feed/
▶️ Telegram: https://t.me/financemagnatesnews
Don't miss out on our latest videos, interviews, and event coverage.
🔔 Subscribe to our YouTube channel for more!🔔
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa