The Japanese Yen and Swiss Franc is quite strong in this week. The USD / JPY and USD / CHF declined after the FOMC meeting minutes release which was resulting some points.
The example is like a strong tapering projection and the interest rate increase that can be done faster by The Fed. Several other major currencies are beaten by the greenback.
USD tried to be stronger to the Franc and Yen when this news was released. However, the USD/JPY and USD/CHF position is still in their lowest level since in the middle of June.
That thing is caused by the speed of COVID-19 delta variant which triggers the risk-off sentiments. The spread of SARS-COV-2 is continued to happen in several countries.
The Actions Taken by the Governments
The Maharashtra state government in India is tightening the social restriction to handle this pandemic. It is included the Mumbai city that becomes the financial industry center in India.
Elsewhere, Tokyo announced their fourth emergency status yesterday that will be applied from Monday up to 22 of August. Meanwhile, the summer Olympic will be held in 23 of Jule – 8 of August.
Malaysia and Indonesia are still continuing to break the record for the daily coronavirus case increase. It is although they have been applying the tighter social restriction.
South Korea also reports the highest daily infection record since the December 2020. This situation decrease the optimism to some high risk curenciees such as the New Zealand and Australian Dollar.
The Effect of Crisis for Some Currencies
It cannot be denied that the market is not sure about the global economy recovery prospect. Vice versa, the crisis is so profitable for the Japanese Yen and Swiss Franck as a safe haven.
Bonds are selling well and yields are falling. Meanwhile, the stock exchange was corrected. The yield on the US Treasury 10Y bond briefly fell to a five-month low of 1.25%.
Before, that was rebounding to a range of 1.34% today. The decline in bond yields weighed on the US dollar's exchange rate movements in the forex market so far.
That is although the Fed's more hawkish stance should have been to soar. It is clear that there is a wind of change in the market. The analysts still highlight some progresses.
Market is Affected by Various Events
An analyst stated in his note for the client that there is not a single catalyst that affects the market sentiment. It is happened because of the accumulation from several different events.
Those are like the SARS-COV-2 delta varian spread and the market perception that the monetary tightening can stop the global recovery. Elsewhere, China also published its data.
On Friday (09/July), China's National Bureau of Statistics published the producer price index (PPI). It rose 8.8 percent on an annual basis in June, but it is still lower than the previous month.
Although slightly down from the previous month's gain, this figure has been in line with economists' expectations. Overall, China's PPI is still near a 13-year high which is not bad. The China’s PPI Data Reports
This is triggered by the increase in the price of the raw materials such as iron ore, copper, to rubber that affects production costs. Meanwhile, China's Consumer Price Index (CPI) rose only 1.1 percent.
It is especially on an annual basis in June, lower than the previous period's increase of 1.3 percent, and did not meet market expectations. That is based on the data reported.
Core consumer inflation, which does not include food and energy prices, rose 0.9 percent on an annual basis in June. The decline in China's CPI data in recent months was caused by a thing.
It is due to the smooth distribution of commodity supply that underpins the price stability at the consumer level. In addition, food prices fell by 1.7 percent in June, worse than May period.
