Foreign Exchange;

Foreign Exchange
Behind the trend
In April, the Dollar lost some strength against the Euro, mainly due to the fall of U.S. bond yields and also to the increase in inflation observed.
Fundamental analysis
The EUR/USD started this month trading at 1.1727. Overall, it was a bullish month for the euro. On April 2nd, the dollar showed some strength, as the number of new jobs was published. However, for 2 days in a row, the dollar fell against the euro, due to the fall in the U.S bond yields. On the 8th, with the European stock market edging higher and with Fed reaffirming its commitment to an ultra-easy monetary policy, the pair hit a level of
1.19. The U.S bond yields fell again on the 14th, after the increase in inflation observed in March, which lead to a decline of the dollar. Later, on the 22nd, with higher than expected Initial Jobless Claims and lower Existing Home Sales (Mar), the greenback was brought down again. On April 29th, due to the Initial Jobless Claims and Pending Home Sales (Mar), being lower than forecasted, the dol- lar improved, ending the month with a slight upturn.

Headline of the month:
The Future of Cryptocurrencies
Cryptocurrencies have gained traction in the modern trading scene and represent enticing advantages over tra- ditional currencies. Most cryptocurrencies use blockchain technology to record transactions. This structure has uses way beyond the support for Bitcoin and is hailed for its de- centralized structure, independent of any central authority, and immune to government interference or manipulation.
Individual Investors use these currencies mainly in two ways: they either add them as assets to their diver- sified portfolios with speculative purposes or use them to hedge against a large financial crisis, similar to what is done using precious metals. This creates concerns over potential overexposure to volatility in portfolios when considering the possibility of a crash of these currencies.
However, the significance of these in the whole market is still quite small for now.
When it comes to companies, big players like Microsoft and Tesla set the example by allowing bitcoin payments and have been rewarded by the market for this action.
Government responses to cryptocurrencies have var- ied, given that some disincentivize their adoption, while others embrace them and even look for ways to use tech- nology in their fiscal methods. However, as the majority of initial coin offerings embody fraudulent schemes, institu- tional governance that understands cryptos’ behaviour is required for their definite authentication.

Susana Almeida, 10/06/2021
Comentários 0