Fear of the new interest rate increases which leads to Recession The main component, which was validated by expectations of economists polled by Reuters that they expect the Federal Reserve to raise interest rates by three-quarters of a percentage point again for the fourth consecutive meeting in November. They also predicted that in December the rally would be 50 basis points until the close of the year at 4.25%-4.50%.
Thus, the other currencies that started today are recovering lower. In particular, the pound fell due to the announcement of tax cuts in the UK.
The treasury bonds American grew 4% For the first time since 2010, waiting for a new rate hike by United States Federal Reservewhich was modified last September 21 to the scope 3% to 3.25%. Given continued inflation, new highs are expected. The 10-year bond yield was 4% and the 2-year bond yield was 4.3%.
increase in Interest rates reignite recession fears And attracted interest in the sovereign bonds of countries. “It’s a combination of adverse impact from the UK, where sovereign bond yields are up. This has extended to other profit margin discount bond markets, so there is a bit of a rebound effect,” he said. Moh Seong SimA currency strategist at the Bank of Singapore in an interview with Reuters.
In parallel, other currencies also show their own dynamics: yuan Falls to 14-year lows and falls against the dollar being placed 0.31% to 7.0226After the wheel opened up 0.8% and touched 7.2354. China’s central bank has asked banks to return to the currency peg they abandoned two years ago.
The The pound recovers and increases 1.1% to 1.085, After opening the day 1% lower, touching $1.0627, and approaching historic lows of $1.0327 again. The depreciation of the pound was driven by the measures income Advertised in the UK Lower taxes and increase debt. However, the Bank of England will wait for its November economic policy meeting to make a decision on the interest rate. Both the International Monetary Fund and Moody’s have warned the British government against changing its policy due to its impact on its currency.
“In the short term, I think the British pound will remain very weak,” he said. Carol Kong“It is basically a crisis of confidence. It will be up to the British government to solve this, rather than the Bank of England,” senior coordinator for international economics and currency strategy at the Commonwealth Bank of Australia told Reuters, adding:
The The euro is up 1.1% and reaches 0.97. Still close to it 20-year low at 0.9528. And renewed gas shortages in the region with the collapse of the Russian gas pipeline, which was still operating nord stream 2, Increases fears of recession due to lack of supply. Added to this scenario is European Central Bank He renewed his determination to raise interest rates again to control inflation.
The Australian dollar It is also recovering after a poor start to the day and rose 1.3% to 0.6519. The Japanese Yen It settled near its lows, but rose to 144.11, even after the intervention of the Bank of Japan.