USD

Markets have been defensive over the past day, with risk assets declining and Gold probing ever higher. This is no surprise, given key quarterly earnings due from a splattering of A-list companies, coupled with major US economic data released later in the week. Asia led the decline, aided by worries over China’s growth prospects, despite the release of strong growth for Q1. (see CNY) Shares in First Republic Bank also slipped over 20% after yesterday’s close, following confirmation that outflows had deteriorated more than expected. The dollar has also been surprisingly defensive, with the dollar index (DXY) slipping by a modest 0.3%. The latest Consumer Confidence and New Home Sales lead the data calendar later. 

EUR

The single currency has started the new week in a positive fashion. The move was aided by another round of hawkish comments from the ECB’s Wunsch. He suggested that the ECB are waiting for core inflation to go down before they can arrive at the point where they can pause rate hikes. He said similar hawkish comments last week. EUR/USD has rallied by over 0.5% since Sunday. 

GBP

The latest data has confirmed that the UK borrowed less than expected over the past year. Borrowing was estimated at £139.2bn, down from the estimated £152bn. That should give the UK government some wiggle room ahead of the next election, which could be used to increase public sector pay after a series of strikes over the winter. Having risen to the highest level in more than a week yesterday, GBP/USD has been in consolidation mode this morning. As a result, the pair has slipped by around 0.25%. 

JPY

USD/JPY has remained fairly rangebound as the dollar’s recent upside surge loses momentum. Looking ahead, this week’s first BoJ meeting under new governor Ueda is unlikely to yield any significant changes. This may be due, in part, to the BoJ’s expectation that Japanese inflation is set to decline further over the coming months. Thursday’s Tokyo inflation is therefore being monitored for evidence of material softening.  

CAD

USD/CAD has rallied by over 1.5% over the past week. Weaker Canadian economic data has helped to justify the BOC’s recent decision to halt rate hikes, which has aided the Loonie’s decline. Last week’s 5% decline in oil prices has also been a significant factor behind the move. This Friday’s growth data will likely confirm further softening amongst Canadian consumer activity.  

MXN

Volatility in USD/MXN has declined over the past week as the pair continues to moderate after recent Peso gains. The Peso has rallied by around 0.5% since Monday as Peso bulls continue to attempt to mark new highs for the currency (USD/MXN declines). 

BRL

The recent rally in USD/BRL stuttered yesterday after briefly reaching a two-week high. The pair declined by around 0.6% overall on the session. Looking ahead, USD/BRL will likely follow broader dollar moves. 

CNY

Worries over plans by the US to limit investments in key parts of China’s economy have led to losses in Chinese equity markets, with the CSI 300 slipping for a fifth day in succession. The move has been aided by worries over the outlook for many Chinese companies, with soft earnings and corporate guidance. This has also negatively impacted the Yuan, with USD/CNY rising to the highest level in a month.