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US Dollar Roars to New Highs as Risk-Off Streng

Markets are seeing dramatic, strong, long-term risk-off trends powering to new highs in the US Dollar, while risk assets sink.

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  1. As the summer ends and September gets underway, markets are seeing strong price movements as risk-off sentiment continues to strengthen on the expectation of further aggressive monetary tightening by the US Federal Reserve. The movement is most pronounced in the US Dollar, with the US Dollar Index powering to a new multi-decade high and the US 30-Year Treasury yield reaching a 14-year high. Stock markets are falling almost everywhere.
  2. Forex is the notable asset class at present, with an extremely strong US Dollar, while the Japanese Yen is clearly the weakest major currency, although there is plenty of weakness in others. The USD/JPY currency pair has continued to appreciate dramatically over the past day, reaching as high as the round number at ¥144, the highest price seen since August 1998. The EUR/USD currency pair hit a new 19-year low at $0.9866, and is falling again, while the GBP/USD currency pair is approaching a 37-year low following the appointment of Liz Truss as the new Prime Minister of the UK – she gave a gloomy first speech yesterday warning of tough times ahead for the UK. There is a strong, long-term bullish trend in the US Dollar, and we are likely to see the currency continue to advance over the coming days.
  3. Stock markets are falling almost everywhere on the strengthening risk-off sentiment.
  4. Commodities are mostly lower, notably WTI Crude Oil which has reached a new 6-month low price below $85.30 per barrel.
  5. Bitcoin/USD has finally made a notable technical breakdown below the key support level at $19,616, and at the time of writing is just $60 off a new 18-month low price.
  6. Yesterday saw releases of US ISM Services PMI data and Australian GDP data. The US data came in higher than expected, suggesting that the US services sector remains relatively strong despite the technical US recession, while Australian GDP grew by 0.9% over the quarter, which had been widely expected.
  7. The Bank of Canada is expected to raise its Overnight Rate by 0.75% today to 3.25% and will also release its rate statement.
  8. The Governor of the Bank of England will be testifying before the British Parliament today on monetary policy, which could affect the British Pound.
  9. Daily new coronavirus cases globally dropped last week for the seventh consecutive week.
  10. It is estimated that 67.7% of the world’s population has received at least one dose of a coronavirus vaccination, while approximately 7.7% of the global population is confirmed to have contracted the virus at some time, although the true number is highly likely to be much larger.  
  11. Total confirmed new coronavirus cases worldwide stand at over 611.4 million with an average case fatality rate of 1.06%.  
  12. The rate of new coronavirus infections appears to now be most significantly increasing in the Netherlands, Taiwan, and Russia.  
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