The US dollar exhibited an upward trajectory against the majority of its major counterparts on Tuesday, as investors sought refuge in the safe-haven currency following an announcement from Moody’s.
Moody’s, in a significant move, downgraded the credit ratings of 10 prominent US banks simultaneously, while subjecting six other major banks to a negative review. Additionally, the outlook for 11 other US banks was revised downward.
This development follows closely on the heels of the startling US government credit downgrade by Fitch in recent days.
Meanwhile, recent Chinese customs data revealed a substantial 14.5% year-on-year contraction in exports for July, marking the sharpest decline since February 2020. Particularly noteworthy was the 23.1% drop in Chinese exports to the United States.
The financial markets are in a state of anticipation as they await the release of the latest inflation data for July. Notably, US consumer price data is slated for publication on Thursday.
The yields on US 10-year treasuries experienced a decline of 9 basis points, settling at 4.0992%, while 30-year yields mirrored this drop, also falling by the same measure to 4.179%.
Patrick Harker, President of the Philadelphia Federal Reserve, offered fresh insights, stating that the current economic conditions do not warrant further policy tightening in the upcoming September period.
Harker’s assertions evidently indicate an expectation for the Federal Reserve to maintain interest rates until the discernible repercussions of recent policy determinations become evident within the broader economy.
Forewarning against an imminent interest rate hike, Harker expressed his anticipation of a subdued economic climate in the United States, forecasting a gentle recession and a deceleration in economic momentum during the latter half of the year.
Regarding trading dynamics, the dollar index exhibited a 0.5% ascent as of 19:45 GMT, reaching 102.5. The session’s pinnacle marked 102.8, while the nadir was pegged at 102.07.
Canadian Dollar and Australian Dollar Movement
The Canadian dollar, or the “loonie,” witnessed a decline of 0.3% against its US counterpart as of 21:01 GMT, trading at 0.7453.
The Australian dollar, often referred to as the “Aussie,” experienced a 0.5% drop against the US dollar, settling at 0.6543 as of 21:01 GMT.