June 14, 2023: Dollar Weakens, Stocks Rise, and Toyota Shares Reach 16-Month High

The dollar declined amid increasing bets halting interest rates increases.

On Wednesday, June 14, the dollar hovered near its lowest level in three weeks against the euro and its lowest level in a month against the British pound, as data reinforced expectations that the US Federal Reserve will refrain from raising interest rates this time when it announces its decision later today.

The Chinese yuan also declined to its lowest level in six and a half months, following a central bank interest rate cut amid speculations of further stimulus to support the struggling economic recovery post-pandemic.

DXY: The dollar index, which measures the currency’s performance against a basket of six competing currencies, including the euro and the pound, stabilized at 103.30 in Asian trading after falling overnight to its lowest level since May 22 at 103.04.

The US Consumer Price Index only increased by 0.1% last month, recording the lowest year-on-year increase since March 2021 at 4%, which increased the likelihood of the US Federal Reserve halting interest rate hikes.

EUR/USD: The euro remained relatively unchanged, recording 1.07885 after reaching a high of 1.08235 against the dollar yesterday, Tuesday.
The European Central Bank will announce its monetary policy decision tomorrow, Thursday, with widespread expectations of a quarter-point interest rate hike.

GBP/USD: The British pound also remained broadly stable at 1.2607 dollars after rising 0.8% in the previous session, reaching its highest level since May 11 at 1.2625 dollars.

USD/JPY: The dollar declined by 0.09% against the Japanese yen, recording 140.11. It reached its highest level since June 5 yesterday, Tuesday, at 140.31, despite lower-than-expected inflation data in the United States, with expectations that the Bank of Japan will maintain its stance on highly accommodative monetary policies on Friday.

AUD/USD: The Australian dollar rose to 0.6772 US dollars after reaching its highest level since May 10 yesterday, Tuesday, at 0.6807 US dollars.
The yuan earlier touched 7.1785 against the dollar in offshore trading for the first time since November 29 but experienced little change in mid-day trading and recorded 7.1707.

Oil prices stabilize amid market anticipation of US interest rate expectations.

Oil prices rose slightly in Asian trading on Wednesday, June 14, as investors awaited the outcome of the US Federal Reserve’s June meeting, critical economic data from China, and government data on US crude inventories.

Brent crude futures rose by 72 cents or 0.97% to $75.01 per barrel. US crude increased by 59 cents or 0.85% to $70.01 per barrel.

Market participants expect the Federal Open Market Committee, a committee of the US Federal Reserve, to temporarily halt interest rate hikes amidst uncertainty about economic prospects and the ongoing effects of ten rate hikes since March 2022.

Interest rate hikes support the dollar, making dollar-denominated commodities more expensive for holders of other currencies and impacting oil prices. Halting the rate increases will stimulate economic growth and oil demand, thereby supporting prices.

Intel shares gained $11 billion, while Netflix shares soared to their highest levels in 17 months.

The US stock market continued its upward trend in Tuesday’s session, supported by inflation data that strengthened expectations that the US Federal Reserve would not raise interest rates on Wednesday.

On Tuesday, the Dow Jones Industrial Average rose by approximately 0.4%, or around 145 points, marking its sixth consecutive session of gains and achieving its highest close in 4 months.

The S&P 500 index also rose by approximately 0.7%, reaching its highest close in about 14 months.

Similarly, the Nasdaq Composite index increased by about 0.8%, recording its fourth consecutive daily gain and reaching its highest close in about 14 months.

Intel: Intel stock rose by over 8% in Monday and Tuesday’s sessions, reaching its highest level in 9 months. This gain added approximately $11 billion to the company’s market value in just two days.

Netflix: Netflix stock jumped by around 3% in Tuesday’s session, reaching its highest level in 17 months. Bank of America recently raised its price target for Netflix stock to $490 from $410, stating that a password-sharing crackdown would increase subscriber growth.

Toyota Shares Surge to 16-Month High as Shareholders Back CEO and Strategy.

Toyota’s Japanese shares jumped by approximately 6.28%, reaching 2,310 yen per share, the highest level in 16 months. The stock outperformed Tokyo’s Topix and Nikkei indices, which rose by approximately 1% on Wednesday afternoon.

This came after shareholders voted to keep Akio Toyoda as the company’s president, showing broad support for its board of directors and its renewed strategy.

These unprecedented challenges from Toyota shareholders come when Japanese companies face increasing pressure to engage their shareholders more effectively in improving capital efficiency and overall profitability.

Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances, or needs.

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