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Forex Daily Recap – Culprit For All “Yield Curve Inversion”

Nikhil Khandelwal

USD Index

On Monday morning, the USD Index that computes the greenback against the six major currencies tumbled down by 0.18 percent reaching 95.98. The index traded lower to its rivals amid global recession fears.

The plunge was followed after the Fed announced that the difference in the spread between three-month treasury bills yield and a ten-year bond’s yield came out to be negative. This particular dreadful condition is normally coined as the “Yield Curve Inversion”. This phenomenon had occurred earlier in 2007 which was just before the start of the global financial crisis. Inverted Yield Curve preceded every Recession in the last 50 years.

USD Index 5 Min 25 March 2019

The fall in the key index had also distributed its agony contagiously to the other weak currencies weighed against it. “I wouldn’t say the dash for safe assets is over. The tone of general risk-off sentiment will prevail for a while but not to the same extent (as on Friday),” Commerzbank strategists Ulrich Leuchtmann said, noting a recession was unlikely in the near term either in the eurozone or the United States.

USD/RUB

The Russian Ruble gained strongly in today’s trading session. The USD/RUB pair touched the intraday low of 63.9800 before bouncing back sharply at a current level of 64.1155. On Sunday, the Special Counsel Robert Mueller released its report of not finding any conspiracy of President Donald Trump’s campaign and the Russian government. This has raised the optimism for the Russian economy, with the assumption that the US will not impose any major sanction. The USD/RUB pair remains the best performing currency on the Year to Day basis.

USDRUB 1 Day 25 March 2019

EUR/USD

At the time of writing this article, the EUR/USD was trading at 1.1319. Today, Germany’s IFO Institute announced its more-than-expected business index. The index recorded 99.6 over the consensus estimate of 98.5. This positive event had helped to reduce the intensity of the recession news from affecting the European shares. The Euro hence gained 0.2 percent reaching the day’s high of $1.1327.

GBP/USD

The Cable was trading at 1.3184 during the day. Sterling Pound remained clung near 1.3228 levels, 0.14 percent up for the day. The pound touched a three-day high level after ITV News reported that the UK Prime Minister Theresa May had mentioned the voting on her Brexit deal will take place tomorrow. She also added that she would resign before the parliamentary vote. The GBP/USD is hence expected to stay highly volatile until April 12.

AUD/USD

The Aussie pair opened up on Monday morning reaching fresh highs touching 0.7100 levels. The AUD/USD pair stay alerted over concerns of US-China trade talks. Mueller’s report created a high level of optimism among the investors on the US-China Trade Settlement.

USD/JPY

The pair had been among the strongest currencies to survive at good high levels for a sustained period. But today the high-level JPY was brought down over concerns of a rising chance of a US Economy Recession. The USD/JPY pair steeply fell down on the opening bell and found support at 109.79. From there, it reached the day high of 110.24. The pair plunged again reached the earlier support again.

USDJPY 1 Min 25 March 2019

This article was originally posted on FX Empire

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