The US dollar index DXY fell more than 0.3 percent to 93.64 in Tuesday trading, although it briefly climbed at the opening earlier in the week. What is the cause?
A number of the manufacturer data in that country for september disappointed the market. Meanwhile, the global risk sentiment began to be active again so far.
Elsewhere, the market participants glanced at several other currencies whose the central banks had planned earlier rate hikes than the Fed. Some data has been released in the market.
The America’s manufacturing output stood at -0.7% in September 2021, missing quite far from the market expectations pegged at +0.1% (Month-over-Month).
The Industrial Production was also Falling
Data for the August period was also revised down from +0.2 percent to -0.4 percent. The US industrial production fell to -1.3% in September 2021, versus the expectations of +0.2 % (Month-over-Month).
The August industrial production data revised down from +0.4% to -0.1%. A variety of factors are behind this situation, including the supply chain disruption and semiconductor scarcity.
The scarcity of semiconductors has been shown to suppress motor vehicle output in the United States, fearing it will hamper thegrowth going forward.
The automotive industry is one of the most important businesses in the country where this sector is contributing about 3.0-3.5% of GDP. That becomes a great income for that country.
BOE Needs to Take an Action
On the other hand, the hawkish rhetoric of a number of non-U.S. central banks is starting to grab the market attention. The United States Treasury bond yields corrected slightly.
Meanwhile , the short-term bond yields from britain and New Zealand led the way globally. The BoE Governor Andrew Bailey has repeatedly alluded to rate hikes in his public communications.
That is for over the past two weeks. He argued that the BoE needed to "take immediate action" to tackle the threat of rising inflation. It is needed to prevent the unwanted effects.
The pound sterling did not immediately soar in response to Bailey's statement, but the GBP/USD has now perched at its monthly record high of 1.3770. It can be seen from the data.
The New Zealand Dollar has an Amazing Increase
The New Zealand dollar became the winner today by chalking up a 0.9% rise to a range of 0.7146 against the USD. It is the highest level in more than a month.
The Yesterday's release of NZ inflation data showed one of the fastest increases since the 1980s. Thus, that was also supporting the continued rate hikes by the RBNZ in the months ahead.
The feeling that 'temporary' inflation will last longer than previously thought has been a major catalyst as markets recalibrate expectations of rate hikes in the different regions.
This opinion was stated by the westpac strategists wrote in a research note. Westpac believes that the US will remain resilient amid an energy crisis that looms over the prospects for recovery in Europe and China.
Meanwhile, Pound Sterling Is Stronger
The pound strengthened to a four-week high against the USD. That comes with the expectations that the Bank of England (BoE) will be forced to raise interest rates despite stagflation.
In Tuesday night's trading session, the GBP/USD rose by 0.4% to $1.3792. That is the highest since Sept. 16. The pair's rise is quite significant because of a reason.
The reason is that the US Dollar is also weakening to a two-week low. In a panel discussion with the consulting group, BoE Governor Andrew Bailey still showed a confidence.
He thought that the recent surge in inflation would be temporary. However, he acknowledged that a surge in energy prices could indeed push that situation higher so that the increase lasts longer.
