Daily Market Pulse

Dollar starts the new week on the back foot

USD

The U.S. dollar index is relatively quiet on early Monday, after closing 0.18% lower in the last session. Meanwhile, the International Monetary Fund (IMF) said in its annual report that the U.S. economic growth forecast for 2022 has been reduced to 2.9% from 3.7% in April. Weakening U.S. economic data weighed on the dollar, with a survey released on Friday showing consumer confidence at an all-time low, prompting investors to reduce their bets on further dollar gains. Elsewhere, San Francisco Fed President Mary Daly has stated that she is willing to support another 75 basis point rate hike in July. U.S. stock index futures trade flat on the day as focus shifts to May Durable Goods Orders data. Pending Home Sales and the Dallas Fed Manufacturing Survey data for June will be featured in the U.S economic docket as well.

  • Monday 06/27/2022 -  Durable Goods orders (May)
  • Tuesday 06/28/2022 - Housing Price Index (Apr) 
  • Wednesday 06/29/2022 - GDP Q1 | Fed Chair Powell Speech
  • Thursday 06/30/2022 - Personal Consumption Price Index (May) 
  • Friday 07/01/2022 - ISM Manufacturing PMI (June)

EUR

The Euro clings to small daily gains and fluctuates nearby early Monday after closing 0.29% higher the previous session. The common currency took advantage of the dollar's decline and recovered from near five-year lows. Meanwhile, on Monday, Secretary-General Jens Stoltenberg will hold a press conference in Brussels. Ukraine wants Nato to recognize its central role in European security when leaders of the alliance meet later this week in Madrid, according to Ihor Zhovkva, diplomatic adviser to President Volodymyr Zelenskyy. Moving forward, the European Central Bank (ECB) Forum on Central Banking will begin later in the day at 1830 GMT, with ECB President Christine Lagarde delivering the opening remarks. Later in the week, investors will also see data on business and consumer confidence.

  • Monday 06/27/2022 -  ECB Lagarde Speech
  • Wednesday 06/29/2022 - Business Climate (June) | Consumer Confidence (June) 
  • Thursday 06/30/2022 - Unemployment Rate (May) 
  • Friday 07/01/2022 - HICP (June)

GBP

The Pound Sterling is continuing to rise after gaining 0.06% on Friday. The broad-based dollar decline boosted the pound sterling. Meanwhile, retail sales in the United Kingdom fell 0.5% in May 2022, following a downwardly revised 0.4% increase in April and falling short of market expectations of a 0.7% fall. Food store sales fell 1.6% due to rising food prices and the cost of living. Coming up today, members of parliament will also vote on proposed legislation that would give ministers the authority to scrap parts of the post-Brexit agreement. The European Union warned that unilateral action on the post-Brexit deal would be a violation of international law. The FTSE 100 gained more than 0.5% on Monday, extending a 2.7% gain in the previous session, boosted by gains in commodity-linked stocks as copper, iron ore, and oil prices rose after China relaxed Covid-19 restrictions and testing mandates.

  • Wednesday 06/29/2022 - BOE Bailey Speech
  • Thursday 06/30/2022 - GDP Q1
  • Friday 07/01/2022 - S&P Global Manufacturing PMI (June)

JPY

The Japanese Yen fell 0.21% in the previous session, but it recovered some of its losses as the new week began. In the latest news, Japan’s benchmark 10-year bond yield rose 1 basis point to 0.23%, tracking its U.S. counterpart higher as improving risk sentiment hurt demand for safe-haven debt. Meanwhile, the 10-year JGB yield remained below the 0.25% implicit yield cap after the Bank of Japan maintained its ultra-easy monetary policy, signaling its commitment to assisting the economy's recovery from the pandemic. The decision was widely anticipated, but it puts the BOJ at odds with other major central banks, which are aggressively tightening policy to combat rising inflation. On Monday, the Nikkei 225 Index rose 1.43%, while the broader Topix Index rose 1.11%, extending last week's rebound and tracking Wall Street gains, as investors continued to assess whether stocks have reached a bottom or are in the midst of a bear market rally.

  • Monday 06/27/2022 -  Leading Economic Indicator (Apr)
  • Tuesday 06/28/2022 - Retail Trade (May) 
  • Wednesday 06/29/2022 - Industrial Production (May) 
  • Thursday 06/30/2022 - Unemployment Rate (May) | Tokyo Consumer Price Index (June) 

CAD

The Canadian dollar appears to edge higher on Monday morning after rising 0.82% on Friday due to higher oil prices. The Loonie strengthened to its highest level in over a week, aided by a rebound in crude oil prices and rate-hike bets from the country's central bank, temporarily diverting attention away from recessionary concerns. Crude oil, one of Canada's major exports, recovered to $108 per barrel after falling in the previous two sessions as concerns about tight supplies outweighed concerns about lower fuel demand caused by aggressive monetary tightening by major global central banks. Meanwhile, inflation rose to a 39-year high in Canada of 7.7% in May, up from 6.8% in April, well above the central bank's target of 2%. Markets now expect the Bank of Canada to raise interest rates by at least 75 basis points in July, with strong labor market and retail sales data bolstering the case for aggressive monetary tightening.

  • Thursday 06/30/2022 - GDP (Apr)
  • Friday 07/01/2022 - Canada day

MXN

The Mexican peso gained 0.74% in the previous session before slightly extending its uptrend this morning amid selling pressure on the U.S. dollar. Mexico's central bank raised interest rates for the first time in history last week and warned of further policy tightening to combat high inflation. The Bank of Mexico raised its overnight interest rate by 0.75 percentage points to 7.75% on Thursday. This increased the rate to its highest level in nearly three years, as well as the largest increase since the Bank of Mexico implemented an inflation targeting system in 2008. The magnitude of the increase also corresponded to the U.S. Federal Reserve's three-quarter-point increase in June, and Banxico acknowledged that other large global central banks were raising interest rates to control rising prices.

  • Monday 06/27/2022 -  Trade Balance (May)
  • Tuesday 06/28/2022 - Jobless rate (May) 
  • Thursday 06/30/2022 - Fiscal Balance (May) 

CNY

China's yuan gained 0.07% against the dollar on Friday. The yuan remained stable against the dollar today after Shanghai declared victory over Covid-19 over the weekend, as investors awaited more convincing signs of a recovery. Shanghai's commercial hub will gradually return to normal life after city officials declared victory in the battle against the latest wave of Covid, which shut down the city for two months. Meanwhile, investors are anticipating June economic indicators to gauge the pace of domestic economic recovery while waiting for clarity on future policy moves. In the most recent developments, China's central bank made its largest daily cash injection into the banking system since March, injecting 100 billion yuan in seven-day reverse repos on June 27 market operations to maintain half-year liquidity stability.

  • Thursday 06/30/2022 - NBS and Non-Manufacturing PMI (Jun) 
  • Friday 07/01/2022 - Caixin Manufacturing PMI (Jun) 

BRL

Real closed last Friday in a new devaluation (-0.28%) and marked its fourth consecutive week of losses, reflecting fears that higher interest rates in major economies lead to a global recession. Meanwhile,  Over the past week, we have continued to be amazed by June numbers for the IPCA-15, which are already above expectations. In monthly terms, inflation reached 0.69% in June, up from 0.59% recorded in May. In this context, the Copom should increase the basic interest rate by half a percentage point or less on its next policy decision in August. Elsewhere, on the radar this week, it is worth mentioning the public hearing to be held at the Committee on Foreign Affairs and National Defense (CRE) of the Senate, on Wednesday (29), with Defense Minister Paulo Sérgio Nogueira, and the commanders of the Armed Forces.

  • Monday 06/27/2022 - BCB focus market readout
  • Wednesday 06/29/2022 - Inflation Index (Jun)
  • Thursday 06/30/2022 - Unemployment rate (May) 
  • Friday 07/01/2022 - S&P Global Manufacturing PMI (Jun) | Trade Balance (Jun)
 

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