Currency News: USD Up, Trans Pacific Partnership Deal Looms
Currency News
US currency hawks continue to believe that China is artificially holding the value of the yuan down compared to other currencies. This comes as the International Monetary Fund has provided a brighter outlook for the currency, and it could possibly change its stance to the currency being properly valued. The IMF has stated that the value is undervalued compared to other currencies since 2005. Politicians in the US are debating whether to pass a Trans Pacific Partnership deal, which is a 12-nation trade pact comprising 40% of the global economy.
Meanwhile, the dollar has appreciated compared to the Euro after the most recent Federal Reserve meeting. After approaching the 1.1400 level, the EUR/USD currency rate fell to 1.1170 after the Fed meeting, where unemployment numbers remained low. The US dollar index, which measures the value of the dollar against a basket of other currencies, has also found strong support, as investors will not let it fall too far as they expect interest rates to be raised in September.
The US dollar had fallen against the euro during each of the previous three weeks before the dollar bounced back. The European Central Bank has been selling off European debt, but this source of euro strength appears to be wearing off. Meanwhile, jobs data rebounded in April, and even though the March data was terrible, it now looks like a seasonal outlier. With interest rates in the US set to be raised later this year, the dollar is likely to continue increasing.
