As of 8 August 2022, neither the Federal Reserve Bank of New York or the U.S. Treasury intervened in the foreign exchange markets for the purpose of supporting the U.S. dollar. Foreign currency brokers by my estimates felt the squeeze in their spreads earned from trade for the dollar (USD) in terms of the British pound (GBP); the Japanese yen (JPY); and the euro (EUR).
Using data from OANDA, I determined that spreads for USD/EUR declined by 11.8% over the period 1 August to 8 August 2022. The spread for USD/GBP also declined by the same amount. The spread for USD/JPY fell by 9.5%, also over the 1 August to 8 August period.
I found it interesting that the price of the USD in terms of EUR, GBP, and JPY went up. The USD/JPY went to 134.983JPY from 132.123JPY during the 1 August to 8 August 2022 period. The USD/GBP climbed to 0.82729GBP from 0.8176GBP while the USD/EUR climbed to 0.98122EUR from 0.97582EUR.
Regarding bitcoin and Ethereum, broker spreads, according to OANDA data have been zero for USD/BTC and USD/ETH.
We should keep our eyes on any impact the recently passed Inflation Reduction Act may have on interest rates since the Treasury may have to issue debt to pay for it. The Act is expected to pass in the House and may ring as a small victory for the Biden administration.
Meanwhile crypto launderer Tornado Cash was sanctioned by the U.S. Treasury Department for currency mixing. According to Grapherex, a currency mixer takes your cryptocurrency and mixes them with other crypto coin in order to hide transactions on the blockchain.
We will keep you abreast of any legal, political, or regulatory events that can shape your markets…
9 August 2022
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