Calm waters for US dollar, G-10 currencies
Currency markets were relatively more sedate overnight than in previous sessions. Wall Street’s slightly positive close temporarily took the wind out of the greenback’s sails, with the flight to safety noticeably absent compared to the last session. The dollar index finished unchanged at 93.33, having probed higher to 95.60 overnight. Today in Asia, it is much the same, with currency markets moribund and the dollar index almost unchanged at 94.35.
That has left G-10 currencies treading water into the final day of the week. Euro, sterling and the Commonwealth’s holding their own, but only just off their recent lows. That suggests that the weaker side is still the downside for all of them, with today’s jump in the equity markets having little to no positive impact.
Asian currencies have edged higher though, albeit only modestly. With the PBOC content to let USD/CNY make time between 6.7500 and 6.8500 for now, regional currencies should continue to outperform vis-a-vis the developed market grouping. The stability overnight will be a sigh of relief for the beleaguered Indonesian rupiah. However, the extension of Jakarta lockdown measures overnight has seen USD/IDR edge back over 14,900.00. Further rises today will almost certainly see the Bank of Indonesia intervening again to defend 15,000.00.
The reluctance of currency markets to reverse US dollar strength overnight and this morning, even as stock markets outperform, suggests that more US dollar upside remains the path of least resistance.
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