The EUR/USD pair sees a relief rally following the French elections, regaining ground above 1.09 at the start of a week packed with market-moving events including US inflation data tomorrow and the European Central Bank meeting on Thursday.
With 27.6% of the vote share, incumbent President Emmanuel Macron led the first round of French Presidential elections, followed by far-right contender Marine Le Pen with 23.4%. The two will now compete in a runoff election on April 24th.
The Japanese yen’s freefall continues unabated, with the USD/JPY pair breaking through the 125 level and setting fresh all-time highs. Increasing US Treasury rates are weighing on the yen, with the US 10-year yield rising to 2.75%, the highest since March 2019.
The ‘zero-tolerance’ policy of China’s Covid-19 begins to have a detrimental impact on the energy commodities market, affecting currencies sensitive to global economic growth such as the Australian (AUD), New Zealand (NZD), and Canadian dollars (CAD ). Oil prices are down slightly less than 2% today, with Brent hovering around $100 a barrel and WTI at $96.
Meanwhile, after being the best currency in the last month, the Russian ruble (RUB) is falling 4% today and exceeding the 80 mark versus the USD, owing to a slew of negative headlines surrounding Russian assets. Aside from the recent slump in oil prices, the Central Bank of Russia (CBR) opted to relax certain capital control restrictions aimed at controlling currency depreciation. S&P moved Russia’s foreign-debt credit rating into default territory and the World Bank forecasted an 11% drop in the country’s GDP this year.
Today, the market will closely monitor the statements of several Federal Reserve officials, most notably Raphael Bostic, Michelle Bowman and Charles Evans, for hints regarding the Fed’s next actions in raising interest rates and decreasing its balance sheet.
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Chart of the day: USD/RUB to the moon and back
Forex markets today – April 11, 2022
- In London’s morning trade, the US Dollar Index (DXY) traded at 99.54, down by 0.2% on the day.
- The euro (EUR) climbed above $1.09, gaining 0.5% on the day. The British pound (GBP) edged marginally up by 0.1% to $1.305.
- Among low-yielding safe-haven currencies, the Japanese yen (JPY) lost 0.8% today, after losing 0.3% on Friday, amid a fresh spike in US long-term yields. The Swiss franc (CHF) gained 0.1% against the USD, aided by the positive momentum of the EUR.
- Among oil-linked currencies, the Canadian dollar (CAD) was flat today, while the Norwegian krone (NOK) fell by 0.3% against the USD amid lower Brent prices.
- The commodity-linked Australian dollar (AUD) was unchanged, as well as the New Zealand dollar (NZD).
- Central Eastern European (CEE) currencies such as the Hungarian forint (HUF) and the Czech koruna (CZK) were mostly flat, except for the Polish zloty (PLN) which slightly fell by 0.3% against the EUR.
- The Russian ruble (RUB) went under pressure, losing as much as 4% today, following the Central Bank of Russia (CBR) easing of capital controls and S&P announcement to downgrade Russia’s foreign-debt rating into default.
- Other emerging market (EM) currencies were mixed. In Asia, the Korean won (KRW) was 0.3% lower, while the Chinese yuan (CNH) fell 0.2%. For the first time in the past decade, the yield on the US 10-year Treasury note surpassed the yield on the local Chinese government bond at the same maturity. The Turkish lira (TRY) gained 0.1%, as unemployment rate fell in Turkey. The Mexican peso (MXN) edged 0.1% higher, while the South African rand (ZAR) continues to rally, gaining 0.6% versus the USD.