S3E10: How is the Federal Reserve policy affecting the foreign exchange market?

We spoke on our last episode about the sharp sell-off witnessed in risk assets in late-April, which sent most higher risk currencies lower against the safe-havens, notably the US dollar. The US dollar index, which measures the currency against a weighted basket of its peers, rose to its strongest position in almost 20 years earlier in the week, as heightened global growth concerns triggered a ‘risk off’ mode in markets. The dollar has also continued to be well supported by expectations for higher US interest rates. At its FOMC meeting last week, the Federal Reserve raised rates by 50 basis points, as expected, the largest such move in more than two decades. The communications from chair Powell were again hawkish. He called the US labour market ‘very, very strong’, while once again saying that inflation remained ‘unacceptably high’.

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The euro goes up, the dollar goes down, and China devalues the yuan. But what's behind these currency fluctuations? This forex podcast is all about the global currency market. Our three financial market analysts, who are also top Bloomberg forecasters, discuss macro-economic news and its effect on the global financial market - providing you with insights to make informed decisions. *The information contained in this podcast does not constitute a recommendation from any Ebury entity to the recipient.