Good morning
We saw some US dollar strength yesterday as risk sentiment got dented, partly by JP Morgan CEO Dimon who warned we should brace for an economic hurricane, while yields pushed higher. Stocks dropped sharply, USD pushed higher, sending GBPUSD down to 1.2460 and EURUSD down to 1.0630 in the afternoon. Stocks did post something of a recovery and USD did weaken, GBPUSD now 1.2525 and EURUSD 1.0680, both off the levels we saw this time yesterday.
GBP performed slightly worse than EUR, with EURGBP trading up to 0.8545 (GBPEUR 1.1705), the single currency helped by talk of rate rises and a move away from negative rates by Q3 2022, starting with a move next month. BoE of course still on track to raise rates as well although Cunliffe did make it clear yesterday that rates would not be reaching levels seen in the 1990s.
BoC raised rates as expected yesterday by 50bps to 1.5%. USDCAD did have a bit of a test lower to 1.2605 before trading up to 1.2670, it has now settled at 1.2655. Further rate rises are expected and it is likely rates will hit 3% later this year, with BoC still seeing a strong economy and talking of forceful action on inflation. Some talk of a possible 75bps move at the next meeting.
Aussie trade balance beats expectations as did their GDP release yesterday. AUD has performed fairly well since, AUDNZD is back up in the mid-1.10s while GBPAUD is currently 1.7450, although did trade as low as 1.7365 yesterday during the GBP sell-off.
That’s about all for now. It is the start of a long weekend in the UK as we celebrate the Queen’s platinum jubilee, its already sunny and will hopefully stay dry for the many parties that are planned. The world of FX rarely closes however so we’ll still have an eye on the markets for you just in case.
I’ve added in Fridays calendar just in case our street party goes on into the early hours. After all, it’s not like we will be disturbing the neighbours given they will be here as well.
- 10.00 EU PPI
- 13.15 US ADP employment
- 13.30 US initial jobless claims
- 13.30 CAD building permits
- 15.00 US factory orders
- 15.45 BoCs Beaudry speaks
- 00.00 AUS S&P services PMI
Friday
- 07.00 German trade balance
- 09.00 EU S&P services PMI
- 10.00 EU retail sales
- 13.30 US nonfarm payrolls
- 14.45 US S&P services PMI
- 15.00 US services ISM
- 20.30 CFTC position data