Most Asian currencies declined on Tuesday as the U.S. dollar strengthened on expectations of a Federal Reserve rate hike, while the Japanese yen retreated from recent highs ahead of a key Bank of Japan meeting.
The Canadian dollar weakened against its U.S. counterpart, as the powerful tailwind from surging oil prices was insufficient to offset a broadly stronger greenback fueled by expectations of an imminent Federal Reserve interest rate hike.
Citi has closed its Norwegian krone vs. Swedish krona position to lock in profits as the pair approaches a major long-term resistance level. The bank maintains that the trade thesis, linked to energy markets and geopolitical risk, remains valid.
Bank of America projects the U.S. dollar will trade in a range for the remainder of the year, as markets have already priced in more than three Federal Reserve rate hikes, setting a high bar for further appreciation.
Bank of America attributes the recent slide in the Danish krone to temporary flow pressures, not market fears over its euro peg. The firm believes the weakness will subside and that the currency's fixed exchange rate will hold.
Citigroup strategists predict the EUR/USD could rally to its summer high of 1.17 if the Fed's upcoming decision sparks a 'sell-the-fact' dollar reaction, but caution that geopolitical risks may limit the move.
Eurozone government bond yields remained near their highest levels in over a decade as investors weigh a surge in crude oil prices against a backdrop of imminent policy decisions from the Federal Reserve, Bank of Japan, and Bank of England.
The U.S. dollar climbed to its strongest level in nearly two weeks on Monday, driven by rising Treasury yields and near-certain expectations for a Federal Reserve interest rate hike this week.
Hedge funds and other large speculators have turned bullish on the Japanese yen for the first time in over six months, according to CFTC data, a significant reversal driven by expectations of faster rate hikes from the Bank of Japan.
