Daily Market Pulse

Daily Market Pulse

Subscribe

Dollar slows down as FOMC dilutes

USD

The U.S. Dollar has had its strongest week so far this year against most of its peers. The USD index, which values the greenback against six major currencies, rallied 1.9% off the back of the Fed hawkish stance, which brought forward the possibilities of rate hikes to 2023. For the week ahead, investors will keep an eye open to Jerome Powell testifying before congress on Tuesday, followed by Gross Domestic Product and Durable Good Orders on Thursday with additional economic activity indicators. On Friday, Personal Consumption Expenditures - Price Index, the primary gauge of inflation used by Federal Open Market Committee (FOMC) policymakers, will be published with expectations set at 3.5% year over year.  On the other hand, the U.S. Senate continues to discuss the Funding for the ambitious infrastructure spending program which seems to be gaining support in the alleys of the capitol. 

  • On Monday (06/21): Chicago Fed National Activity Index | Fed’s Williams speech
  • On Tuesday (06/22): Fed’s Chair Powell testifies - Congress 
  • On Wednesday (06/23): Fed’s Bowman speech | Markit Manufacturing PMI | Markit Services PMI | Markit PMI Composite | New Home Sales | Fed’s Rosengren speech 
  • On Thursday (06/24): Core Personal Consumption Expenditures | Durable Goods Orders | Continuing Jobless Claims | Gross Domestic Product (Q1) | Bank Stress Test Info | Business Inventories 
  • On Friday (06/25): Core {erspma; Consumption Expenditures - Price Index | Personal Income | Personal Spending | Michigan Consumer Sentiment | Fed’s Rosengren speech 

EUR

The EUR fell 2.24% against the greenback after inflationary pressures and Fed policymakers igniting a demand for dollars amid Risk-off sentiment woes. Christine Lagarde, President of the European Central Bank, is set to speak today; There is a chance she could hint at possible adjustments on her ultra-loose monetary policy, but market participants expect European policymakers to continue supporting the economic recovery by sustaining its expansionary approach. Later this week, President Lagard will speak again following the release of Markit PMIs and the Non-Monetary Policy meeting on Wednesday, while the European Council is due to meet on Thursday with the Economic Bulletin to be released on the same day.

  • On Monday (06/21): ECB’s President Lagarde Speech 
  • On Tuesday (06/22): Consumer Confidence (Jun) | ECB’s Lane Speech | ECB’s Schnabel speech  
  • On Wednesday (06/23): Non-Monetary Policy ECB meeting | ECB’s De Guindos speech | Markit Manufacturing PMI | Markit Services PMI | Markit PMI Composite | ECB’s President Lagarde speech
  • On Thursday (06/24): European Council Meeting | Economic Bulletin | ECB’s Panetta speech | ECB’s Schnabel speech 
  • On Friday (06/25): European Council Meeting | Private Loans | M3 Money Supply | CFTC EUR NC Net Positions

GBP

The British pound dropped 2.14% against the dollar last week amid a shift in stance by Fed and reopening delays in the U.K due to a surge in coronavirus cases from the Delta variant. Meanwhile, U.K retail sales failed to impress, falling unexpectedly in May while headline inflation registered above the Bank of England’s (BoE) target of 2%. This week, the BoE meets on Thursday to decide its monetary policy, which we are expecting to remain unchanged at least until the economy actively reopens. However, inflationary pressures could oblige policymakers to adjust asset purchase programs in order to control the surge in prices. On the other hand, Brexit jitters continue in the background, as U.K steel manufacturers could be affected by the Brexit protocols as Tories warn about cheap foreign imports in the name of free trade agreement. 

  • On Monday (06/21): Right Move - Housing Price Index 
  • On Tuesday (06/22): Public Sector Net Borrowing 
  • On Wednesday (06/23): Markit Manufacturing PMI | Markit Services PMI 
  • On Thursday (06/24): BoE Interest Rate Decision | BoE Monetary Policy Summary | BoE Minutes | Gfk Consumer Confidence | BoE MPC Vote Results 
  • On Friday (06/25): BoE Quarterly Bulletin | CFTC GBP NC Net Positions 

JPY

The Japanese Yen retraced 0.56% against the dollar, depreciating less than other major counterparts as its safe-haven appeal and risk-off sentiment take over the market. The Fed surprised on Wednesday last week by raising its inflation and growth forecast, including two rate hikes by 2023. Additionally, the Bank of Japan (BoJ) extended its pandemic-relief program in order to catch up with other developed countries in the economic recovery. This week, market participants will focus on BoJ Monetary policy Meeting Minutes which are due on Tuesday while Governor of the BoJ, Kudora, will speak on Thursday addressing inflation reading for June. 

  • On Tuesday (06/22): BoJ Monetary Policy Meeting Minutes 
  • On Wednesday (06/23): Jibun Bank Manufacturing PMI (June) | Coincident Index (Apr) | Leading Economic Index |Foreign Investment | Corporate Service Price Index 
  • On Thursday (06/24): BoJ’s Governor Kudora Speech | Tokyo Consumer Price Index | 
  • On Friday (06/25): CFTC JPY NC Net Positions 

CAD

The Loonie fell back 2.3% from Monday to Friday, mainly driven by a bolster in USD demand in the aftermath of the Federal Open Market Committee meeting last Wednesday.  The commodities linked currency has retraced following a drop in the Bloomberg Commodity Index (BCOM) which has corrected 4.2% since the 10th of June as market participants take profit after strong performance of commodity prices in the first half of the year. The slowdown was also reflected in the West Text Intermediate (WTI) crude oil which has been stuck above USD 70 per barrel for the past week. This week, the Loonie has a light economic calendar with Retails sales figures on Wednesday. 

  • On Wednesday (06/23): Retail Sales (Apr) 

MXN

The Mexican Peso retraced 3.97% against the USD by Friday last week as pressure mounted from the Fed officials revising up their growth and inflation estimates. Additionally, credit rating agencies maintained the investment grade on the Mexican sovereign debt, allowing for a stable outlook with significant risks to monitor very closely. However, market participants will closely follow Retail Sales on Wednesday while Inflation figures will be released on Thursday followed by the Banxico Interest Rate decision. 

  • On Wednesday (06/23): Retail Sales (Apr) 
  • On Thursday (06/24): 1st Half-month Core Inflation (June) | 1st Half-month Inflation (June) | Banxico Interest Rate Decision 

CNY

The Chinese Yuan kicked off the week by extending last week's losses against the USD, recording 0.31% retracement during the Asian trading hours of Monday. Today, the Peoples Bank of China announced it would leave the Interest rate unchanged, with One-year Loan Prim Rates (LPR) at 3.85% and Five-year LPR at 4.65%, recording 14 consecutive months of steady LPRs. However, market participants expect the PBoC policy to decouple from the Fed, especially as May’s economic data signals downside risk to China as the economic slowdown has been clear in the recent data releases. Therefore, the relatively hawkish stance of the Fed is unlikely to have a bearing on China’s monetary policy.   

  • On Monday (06/21): PBoC Interest Rate Decision 

BRL

The Brazilian Real has been one of the best-performing currencies against the USD, recording 0.39% gains from Monday to Friday despite the broader global demand for dollars. The performance of the Real comes off the back of the latest interest rate hike from Brazil’s Central Bank (BCB) adding 75 bases setting the Selic rate at 4.25%. The market is pricing in another 75 basis point hike for the next meeting, as policymakers pursue normalisation of monetary policy as inflation and growth figures provide room for a hawkish policy. This week, the BCB will release current account figures on Friday.

  • On Monday (06/21): BCB Focus Market Readout 
  • On Tuesday (06/22): BCB Copom Meeting Minutes 
  • On Thursday (06/24): FGV Consumer confidence (Jun)
  • On Friday (06/25): Current Account (May) | Mid-Month CPI (June)

Quick Insights

USD: Dollar slows down as FOMC dilutes

USD: Dollar slows down as FOMC dilutes

EUR: Euro Steady ahead of Lagarde Intervention

EUR: Euro Steady ahead of Lagarde Intervention

GBP: Brexit chaos and reopening delays weigh on GBP

GBP: Brexit chaos and reopening delays weigh on GBP

JPY: JPY limit losses as Treasury yields fall

JPY: JPY limit losses as Treasury yields fall

CAD: Loonie retraces alongside commodities

CAD: Loonie retraces alongside commodities

MXN: MXN awaits for Banxico interest rate decision

MXN: MXN awaits for Banxico interest rate decision

CNY: PBoC leaves monetary policy unchanged

CNY: PBoC leaves monetary policy unchanged

BRL: Real gains as BCB hikes interest rates

BRL: Real gains as BCB hikes interest rates

Have questions?

Want the Daily Market Pulse delivered straight to your inbox?

Want the Daily Market Pulse delivered straight to your inbox?

Sign up for a free account

Sign up for a free account

Access our convenient and secure online platform to process your international payments. Manage beneficiaries and view payment status and history at the click of a button.

Find out more
FX business solutions

FX business solutions

We provide tailored services to help companies make international payments and manage their foreign exchange risk

Find out more