USD

Mixed corporate earnings sent risk assets lower through today’s European session. European stocks and US equity futures took the brunt of the decline, with the Nasdaq leading the charge and dropping by over 1%. Currencies largely ignored the memo, with the key dollar index (DXY) flat. Further evidence of the recent slowdown in the US Housing Market could be witnessed later with the release of the latest Existing Home Sales. 

EUR

The single currency is currently attempting to stage a rebound. EUR/USD is around 0.25% higher so far today. Helping to fuel the move has been ECB governing member Klaas Knot. He suggested that it was too early to discuss a pause in (ECB) hikes. The release of today’s ECB minutes may also give markets some clues as to the length of their tightening cycle from here.

GBP

While there has been some moderation over the past month, UK headline inflation remains at over 10%. That figure is almost double the level of inflation in the US. Food price inflation has been particularly resilient, although there may finally be some better news on that front soon. The news on inflation has also helped to fuel increased market bets that the BoE will be forced into a more aggressive path of rate hikes, starting with another 25bps at the May meeting. Sterling has received a boost from the news, with GBP/USD rallying to a fresh weekly high yesterday. 

JPY

According to Reuters, the BoJ could be open to ‘tweaking’ their YCC policy later this year, should wage momentum hold. While this may impact the Yen’s path in the future, for now, it remains under pressure. USD/JPY has risen by over 0.7% through this week, with EUR/JPY rallying by around 0.5%. This evening’s Japanese national CPI data is expected to highlight further moderation, with headline inflation predicted to fall from 3.3% to 2.6% on an annual basis.  

CAD

Further evidence of a softening Canadian housing market was supported yesterday after the latest Housing Starts declined to levels last witnessed during the pandemic. The larger-than-expected decline in March looks to have been directly caused by the rapid increase in borrowing costs. However, the BoC’s recent decision to pause rate hikes may yet boost recovery prospects. USD/CAD is around 0.8% higher so far this week. 

MXN

The longer USD/MXN remains above 17.80, the greater the chances of a higher spike for the dollar. With the broader dollar also being boosted over the past few days, the Peso is struggling to break new ground. This remains a concern for Peso bulls. 

BRL

Having been on a sharp rally of late, this week has been a disaster for Real bulls. Indeed, USD/BRL has rallied by over 3.65% since Monday as the dollar finds some serious levels of support. 

CNY

In a widely expected move, the PboC maintained China’s key policy rate at 3.65% overnight. In their accompanying statement, they also suggested that they will maintain a ‘prudent’ monetary policy this year as they continue to support the Chinese economy as it emerges from the long pandemic lockdown. USD/CNY is around 0.4% higher this week.