The summer of 2014 saw a real shift in the USD environment, with the catalyst for a sharp appreciation in the currency coming from USD from the European Central Bank’s (ECB) decision to introduce a negative deposit rate for the euro (EUR). Within days of its implementation, a rally began that subsequently saw the USD index gain close to 25%.
In Global Banking & Finance Review, Steven Derrick, Chief Currency Strategist, BNY Mellon, discusses the influence of dollar movements on global markets and the effects since this significant move in the currency – including the impact on commodity prices and emerging market currencies.
Derrick also describes how both the downward pressure on oil prices, and the turmoil in Chinese currency markets, can be seen as a function of the radical shift in the broader market environment since the summer of 2014 – indicating that, while China might temporarily stabilise the CNY, or oil might find some temporary updrafts, the key issue will remain relative to demand for the USD.
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