Latest Forex News – SWIFT bank payments are set for a major shakeup.

Meanwhile, the US Dollar and Japanese Yen are in focus for forex traders.

Stay ahead in the trading game with the latest Forex news, unveiling groundbreaking trends and insights for savvy investors worldwide.

Latest Forex News: Market Snapshot

The US stock market saw mild gains on Tuesday, and global benchmark indexes saw subdued movements.

This was along with a fairly steady Japanese yen that hasn’t moved much away from the levels that prompted intervention in 2022.

There’d been comments from a Japanese official announcing plans to discourage speculative shorting by reducing an end-of-day discount for traders borrowing yen – an apparent reaction to Japan’s recent monetary policy tightening.

Latest Forex news: Holidays on the horizon

With Good Friday on the horizon, when many US and other global financial markets will observe a holiday, a certain warning still hangs over financial markets.

Yields had eased in the US morning trading session.

The Dow Jones Industrial Average rose 0.24% to 39,409.28. The S&P 500 rose 0.27% to 5,232.51.

The Nasdaq Composite rose 0.34% to 16,439.78. The MSCI world index of shares outside the US rose 0.24% to 781.32.

Latest Forex news: Choppy market action

Choppy action after the Federal Reserve meeting along with a very late Monday could help calm market conditions and limit data-driven volatility.

On the other side of the world, the STOXX 600 in Europe edged higher.

The MSCI Asia-Pacific shares ex-Japan closed 0.27% higher.

The yen, meanwhile, traded near its weakest level versus the US dollar since 1990, following a half-percentage-point rate hike by the Bank of Japan this week, its first in 17 years.

Latest Forex news: Yen in Focus

The prime minister even called upon the central bank to take “decisive action” to rectify years of damage caused to the economy.

The Japanese Finance Minister dropped a not-so-subtle hint that Japan could still choose to intervene, albeit one that inadvertently drew attention to the market’s escape from central bank control.

At a Washington event this week, Japanese Finance Minister Shunichi Suzuki said measures may be taken to seal in the yen’s losses and stave off a stormy weather pattern of dollar for yen rate volatility.

Latest Forex news: Yuan weakened

The currency’s slight weakening against the offshore Chinese yuan was also recorded, even as some market analysts suspected China was gaming its currency down after a precipitous dip.

Trading in currencies is being affected by the possibility of currency market intervention by Tokyo and Beijing.

Traders are reacting to the relative fear of the two eastern giants about just how bad the economic outlook is as well as how much the potential for inflation has risen.

Latest Forex news: US FED to cut rates

Following the failure of the US Federal Open Market Committee to cut interest rates (and mixed messages from Federal Reserve officials on whether they would cut rates at the next meeting), there is an increasing diversity of expectations about US monetary policy.

Interest rate futures are priced to have two cuts this year, and a 43% probability of a cut by June.

In the US, durable goods orders rose while business equipment spending showed signs of recovery, meaning that the first quarter has cosmetically positive economic indicators.

Latest Forex news: Other market options

This is reflected in some upward movement in US 10-year notes and 2-year notes.

Oil prices slightly fell, US did see a decline in US crude and Brent crude. Similarly gold prices and US gold futures.

The volatility of the cryptocurrencies has become quite high. Bitcoin and the most prominent altcoin Ethereum weakened.

Latest Forex news: Yen eases back

Meanwhile on Tuesday, as the yen was holding just below ¥141 to the dollar, near its weakest since March 1985, Japanese officials continued to chide the yen’s decline.

The warnings and the dollar eased back a bit, the euro climbed 0.18% higher to $1.0858 and the pound rose 0.17% to $1.2658 boosted by a bit to recover from its slump.

The yen inched higher against the dollar to 151.39, after a more than 1% slide since a monster interest rate hike from the Bank of Japan the previous week.

Latest Forex news: US Traders eyeing the Yen

A perennial interest-rate disparity between Japan and other countries, particularly the US, keeps traders’ eyes trained on the yen.

Should it cross the 151.94 per dollar that it reached way back in October 2022, the yen would hit levels not seen since 1990.

Japanese officials stepped into the currency market to support the yen in 2022.

Latest Forex news: Combating the plunging Yen

Finance Minister Shunichi Suzuki on Tuesday stressed that the government was ‘prepared, without limits, to consult on any measures’ to combat the plunge in the yen, prompting the nation’s top currency official to issue a similar warning on Monday.

Yusuke Miyairi of Nomura, the Japan-focused currency strategist, said that the pair seems to be ‘going nowhere’ and trading in the 151.50 area.

Latest Forex news: US dollar/yen rate tend to pull back?

Speculative interest to bet against the yen, for carry payouts, remains high, but the dollar/yen rate tends to pull back whenever it comes close to 152 and 153 – prompting market players to expect Japanese currency regulators to step in.

Some carry trades in the options market make it impossible for the dollar to rise above, say, 152 yen, thereby exacerbating swings past that point. 152 is a psychological level.

Latest Forex news: Market speculation on Yen/US Dollar

If the dollar goes beyond that, that is when the dollar/yen rate could move up very quickly and would become a candidate for intervention.

In Asia only, trading on currencies was volatile because of local events. Traders in other parts of the world have had little, if anything, to trade on, for the past several weeks.

The upcoming economic data calendar is sparse, and the Federal Reserve’s favoured measure of inflation data, due on Friday, could help a little in pointing to when the US interest-rate cycle might end.

Latest Forex news: US PCE

February’s core US personal consumption expenditures (PCE) index is forecast at 0.3%, keeping annual growth at 2.8%.

The Swiss franc continued to languish after the Swiss National Bank’s shock rate cut last week, adding 0.28% yesterday to 0.9022 dollars and hitting a fresh four-month wall, and up 0.5% at 0.9797 euros, the best showing since July 2023.

Traders were also watching the Chinese yuan after its sharp decline on Friday.

Onshore yuan was marginally weaker at 7.219 per dollar, after the People’s Bank of China’s fixing was a touch stronger. Offshore yuan edged up a touch to 7.245 per dollar.

Latest Forex news: Bank of Nigeria raising interest rates

That lent support to currencies linked to China, with the New Zealand dollar climbing out of four-month lows to $0.6021 from $0.5986, and the Aussie rising 0.2% to $0.6553.

The Central Bank of Nigeria has raised interest rates by 200 basis points, moving from 22.75% to 24.75%, in a bid to tame inflationary rates.

The bank announced the hike in its Monday monetary policy meeting and was confirmed on Tuesday by the governor, Olayemi Cardoso.

Last month, the apex bank hiked the monetary policy rate by 4 percentage points, its biggest since 2005, to tame price levels that have been on the rise for more than eight months.

Latest Forex news: Nigeria inflation over 30%

This year, inflation is over 30%, annually – the highest in nearly three decades – fueling price increases that have pushed millions in Africa’s largest economy and most populous country into a cost-of living-crisis.

Many cannot afford the bare minimum.

At Wednesday’s press conference, Cardoso said that all MPC members agreed that it was imperative ‘to continue with the Tightening Cycle up until the reduction of inflation’, but pointed out that they foresee a gradual abating of inflationary pressures ‘from May onwards’.

The MPC made no mention of the Central Bank’s new role over the period.

The committee’s disclosures alluded to curbing current inflationary trends, the need to anchor expectations and preserve exchange rate stability.

The move was only the second such ruling since Cardoso took over in September, with the first committee meeting occurring in February.

Inflation stemmed from reforms he implemented in his first year in office, such as ending huge fuel subsidies and two devaluations of the naira currency.

Tinubu has defended these reforms (though they sparked public protests and outrage in several cases), saying they were needed to advance the economic development that would attract investment.

In the wake of the rate call, some of Nigeria’s international sovereign dollar bonds rallied, with the 2029 bond being most in play higher, climbing 1.4 cents to 97.9 cents on the dollar by 1344 GMT, according to Tradeweb data, the highest since January 2021.

On Tuesday, Catherine Mann, an external member of the Bank of England’s monetary policy committee, complained that markets have too rosy a vision for the number of interest rate cuts they expect from the British central bank this year.

Mann told Bloomberg TV that an expectation for three quarter-point cuts in the Bank of England’s (BoE) base rate this year (by the end of 2023) strikes her as a bit too optimistic.

She noted that in the three weeks since the last meeting of the MPC, there has been a notable easing in market expectations for the path of interest rates.

‘And markets might be pricing too little in terms of how long the MPC wants to keep rates at current levels,’ she noted.

Mann (who recently joined the majority of the MPC in keeping the Bank Rate at 5.25%, the highest since 2008, having previously wanted it raised to 5.5%) explained her change of tack in the following terms.

She also noted how market expectations affect the BoE’s monetary policy strategy stating that:

That is, again, the real effect on borrowers is mediated by market rates, such as mortgage rates, rather than the Bank Rate.

Here, then, is the financial market, pricing its assets in a way that is literally helping the BoE to manage the economy.

Latest Forex news: SWIFT Bank shakeup

It might allow the existing global banking communications network SWIFT to integrate the emerging CBDCs with the legacy financial system, according to a report by Re central banks worldwide are developing or exploring CBDCs.

Such news places SWIFT firmly in their path.

And SWIFT, with more than 11,000 subscriber organizations in 200 countries encompassing virtually all contributions to global finance, has a lot of influence.

For instance, Nick Kerigan, SWIFT’s head of innovation, recently discussed the results of a CBDC and tokenised assets trial.

Among the network were central banks, commercial banks, and settlement platforms from around the globe.

He said the trial focused on the interoperability of CBDC designs built using different technologies to reduce the risk of a fragmented payment system.

The network also studied the potential for automating CBDCs to improve speed and reduce costs in more sophisticated transactions, such as those tied to trade and foreign exchange payments.

That success has brought the timeline for moving the experimental project into a market-ready product at SWIFT within the next 12 to 24 months, and in that timeframe, integration with CBDC could become a reality.

The platform could launch at any time, depending on when major economies unveil the bank digital currencies that will power it.

If major economies don’t succeed in bringing their CBDCs to market soon, SWIFT may have one last card to play.

Having equipment to facilitate CBDC transactions ready to go as soon as this technology debuts could thoroughly cement SWIFT’s place at the core of global banking.

Only a handful of countries – among them the Bahamas, Nigeria, and Jamaica – operate CBDCs now.

Others, such as China and the European Union, are in the process of piloting and developing them at present.

And the Bank for International Settlements is running live cross-border trials.

SWIFT currently has 200 countries connected and links more than 11,500 banks and other financial institutions around the world.

It processes trillions of dollars in payments every day. As a result, SWIFT is well-placed to help CBDCs be included in global payments.

Central banks in Germany, France, Australia, Singapore, Czech Republic and Thailand would be involved in the trial, as would the major commercial banks HSBC, Citibank, Deutsche Bank, and others.

It’s a concept that offers a single global reach for digital asset payments: a single new network where today’s plethora of individual connections and agreements is managed discretely.

Likewise, Kerigan pointed to a forecast from the Boston Consulting Group predicting that by 2030 ‘close to $16 trillion in assets could be tokenised’.

SWIFT’s aim is to create a modular solution that can benefit multiple networks and encourage wider use of digital assets throughout the financial sector.