Daily Market Pulse

USD

The dollar has found some deserved support this morning, with the dollar index (DXY) rallying over 0.6% as broad risk aversion accelerated (see EUR). Although today should be significant for US economic data releases, with both Durable Goods Orders and key PMIs, market focus looks to be very much on the escalating jitters over bank stocks again, now that they appear to have moved on from the recent central bank meetings. 

EUR

Euro markets settled over the past few days, but bank stocks have led a fresh wave of broad risk aversion through the European morning session. At one point, the German lender’s shares tumbled by around 13% after the bank’s CDS (credit default swaps) climbed from 134bps on Wednesday to over 198bp by this morning. The move came despite efforts from a host of officials attempting to calm the nervous market throughout the week. Despite the recently hawkish commentary from the ECB, the single currency has tumbled over the past day, in lieu of the escalating Deutsche crisis, with EUR/USD slipping by over 1.2% from yesterday’s high. There is better news in the recent PMI data, with solid increases in services and composite components. Only manufacturing disappointed. However, data is still taking a back seat for now.

GBP

UK data has been a mixed bag today, with stronger Retail Sales, which increased by 1.2% through February, against an expected 0.2% jump. However, there was a surprising miss in the latest PMI survey, with all three components missing estimates. Both the composite and services data remain well above the critical 50 threshold. The UK seems to have protected from the recent banking woes (so far), which is probably helping to support the pound. Although, GBP/USD has been dragged around 0.6% lower today amidst that broadly stronger dollar.

JPY

The Yen has understandably been a clear winner as market nervousness accelerates, with USD/JPY slipping by 0.6%, GBP/JPY dropping by just over 1%, and EUR/JPY collapsing by around 1.5% this morning. The moves came despite regional headline Japanese inflation unexpectedly decreasing from 4.3% to 3.3% yearly through February, helping to underpin the ongoing decision by the BoJ to maintain YCC. 

CAD

Recently softer data, including inflation, has seemingly underpinned the BoC’s decision to pause their program of rate hikes. However, today’s Retail Sales data may be an outlier, given that analysts expect a 0.7% increase over the past month, up from 0.5%. Having fallen over the past few days, USD/CAD is also pushing higher this morning alongside other major dollar pairs, rallying by around 0.5% so far. 

MXN

The high volatility amongst major emerging market pairs continues, with USD/MXN rallying by just under 1% this morning, having declined through yesterday after stronger-than-expected Mexican Retail Sales, which jumped by 1.6% through January, marking a 5.3% annual increase. 

BRL

Given the recent market turbulence and political instabilities, the Real continues to struggle, with USD/BRL rising by around 1.2% through yesterday. Of course, that was before the latest worries over the banking sector had a chance to impact today’s spot price, which has the potential to rally further before this evening’s close.