Forex: Dollar Drops vs Yen as NAFTA’s Risk Appetites Fade
iFOREX – On Tuesday, the greenback increased in battling against a basket of currencies, however, it declined from a peak of more than 10 months versus yen as the North American Free Trade Agreement’s risk appetites faded.
Traded anticipated the outcome of a monetary policy meeting in Reserve Bank of Australia. Based on a Reuters poll, the RBA is likely to make expansion of its record spell of rates at 1.5% well into 2019 with a 25 basis-point hike.
The dollar index, which measures the greenback against a basket of currencies, inched up to 95.322, dealing near a high of 95.373 for three weeks.
Moreover, the US Federal Reserve has strengthened the dollar amid worries on global trade war between the United States and major trading partners such as China have lifted the greenback to 3.4% this year.
The fresh NAFTA deal, which was announced on Sunday, between the United States, Mexico, and Canada preserves a $1.2 trillion open-trade zone.
“[The U.S trade representative] was occupied solving the problem in relation to NAFTA up until now. Japan and the United States can really kick off their trade negotiations now that has ended,” said Ayako Sera, market economist at Sumitomo Mitsui Trust Bank.
Meanwhile, US President Donald Trump and Japanese Prime Minister Shinzo Abe had come in terms to begin new trade talks.
On Tuesday, the greenback increased 0.06% to 113.92 yen. After the announcement of the trade agreement between the United States and Canada, the yen slipped to 114.06 per dollar, its weakest since November last year.
This year, the dollar increased over 1 percent in battling with yen. The greenback advanced 2.3% versus the Japanese currency in September.
“If we close this week above 114, that’s going to be a significant milestone,” said Bart Wakabayashi, Tokyo branch manager at State Street Bank.
Elsewhere, the Australian dollar surged 0.5% higher at $0.7228 ahead of the policy decision of the RBA.
Meanwhile, the Canadian dollar exchanged at C$1.2804 per dollar, standing at its gains of 0.7% the previous day. The euro declined 0.6% versus the dollar to trade at $1.1573 on fresh worries regarding the budget deficit of Italy.
Forex: Australian regulator launches inquiry into forex services
On Tuesday, the Australian Competition and Consumer Commission (ACCC) launched an inquiry into the price competition among suppliers of foreign currency conversion services. Further, the Australian regulator would pursue to probe the potential players’ ability for competition.
Moreover, the ACCC said that the inquiry would investigate the presentation of exchange rates to customers and the markup from the wholesale currency rates – the charges that buyers have to pay when changing currencies.
“We will be examining why major companies in Australia, including the Big Four banks, seem to be able to consistently charge high prices. The exchange rate you Google (NASDAQ: GOOGL) is not the exchange rate you get from the Big Four banks. The difference is known as the ‘mark-up’, and it’s often a big part of the price consumers pay when converting currency,” ACCC Chair Rod Sims said.