Daily Market Pulse

Dollar hits fresh 20 year high

USD

The risk-averse market situation is supporting the dollar in finding demand as a safe haven at the start of the new week, with the U.S. Dollar Index sitting at its highest level since November 2002 after finishing 0.08% higher the previous day. Uncertainty about the future for inflation, the Ukraine war, and Chinese lockdowns was among the factors driving safe-haven demand for the dollar. Meanwhile, the Fed hiked its benchmark funds rate by 50 basis points last week, and a good employment report bolstered expectations for additional large hikes. Investors are now anticipating fresh inflation statistics due on Wednesday to obtain insight into the central bank's next potential moves. Elsewhere, Futures on the S&P 500 and the Nasdaq 100 dipped 0.9% each, reflecting the cautious mood in the markets.

  • Monday 05/09/2022 - ISM Manufacturing PMI (Apr)
  • Tuesday 05/10/2022 - Fed's William and Waller's Speech 
  • Wednesday  05/11/2022 - Consumer Price Index (Apr) 
  • Thursday  05/12/2022 - Producer Price Index (Apr) 
  • Friday  05/13/2022 - Michigan Consumer Sentiment Index (May)

EUR

The Euro closed 0.09% higher in the previous session before reviving its momentum on Monday morning amid a cautious market mood. Meanwhile, According to European Union (EU) Foreign Policy Chief Josep Borrell, the EU should consider taking frozen Russian foreign exchange reserves to assist pay for the cost of rebuilding Ukraine after the war. Meanwhile, European Central Bank (ECB) Governing Council member Olli Rehn underlined that interest rates may begin to rise in July, but this comment did not assist the Euro finding demand. During the week, investors will also observe ECB President Lagarde's address and industrial data. Furthermore, European markets slumped, putting the MSCI world stock index down 16% from its November peak.

  • Tuesday 05/10/2022 - ZEW Survey
  • Wednesday  05/11/2022 - ECB Lagarde Speech
  • Friday  05/13/2022 - Industrial Production (Mar)

GBP

The Pound sterling closed 0.11% lower yesterday and continued to post losses this morning against the greenback. Meanwhile, the 10-year Gilt yield in the United Kingdom touched a 6-1/2-year high of 2% in the second week of May, as the global bond sell-off deepens amid concerns about increasing inflation, tight monetary policy, and recession. Domestically, the Bank of England raised interest rates to 1% for the fourth time in May, increasing borrowing costs to their highest level since 2009, but market players are beginning to believe the central bank will be limited in additional rate hikes due to a bleak economic outlook. In other news, the FTSE 100 traded slightly below the flatline on Monday, in line with its European peers, as the commodity-heavy index was dragged lower by global growth woes amid ongoing lockdowns and stringent health restrictions in China, while Victory Day parades, commemorating the end of WWII, will be closely watched around the world.

  • Monday 05/09/2022 - BRC Retail Sales (Apr)  
  • Thursday  05/12/2022 - GDP Q1 | Industrial and Manufacturing Production (Mar)

JPY

The Japanese Yen closed 0.28% lower in the previous session against the greenback. In the recent news, The Jibun Bank Japan Services PMI was revised higher to 50.7 in April 2022 from 50.5 in flash data and 49.4 in March. In addition, the Jibun Bank Japan Composite PMI was 51.1 in April 2022, up from 50.9 in March and a final 50.3 in February. This was the second consecutive month of growth in private sector activity, and the fastest since last December, indicating the relaxation of COVID-19 restrictions, which allowed enterprises to operate more freely. In other news, the Nikkei 225 Index fell 2.53%, while the broader Topix Index fell 1.96% on Monday, giving up gains from the previous session and following an early slide in U.S. equity futures, as investors weighed tighter monetary policy globally against the backdrop of high inflation and a challenging growth outlook.

  • Monday 05/09/2022 - House Spending (Mar)  
  • Wednesday  05/11/2022 - BOJ Summary of Opinions | Trade Balance (Mar) 
  • Thursday  05/12/2022 - Money Supply (Apr) 

CAD

The Loonie closed 0.32% lower in the previous session before extending its losses on Monday morning.  The Loonie fell to a 19-week low against the U.S. dollar, as robust job market statistics in the U.S. raised expectations of further Fed monetary policy tightening. Domestically, the Bank of Canada is expected to maintain its hawkish posture, despite Canadian unemployment reaching a historic low of 5.2% in April. Governor Macklem stated that the Bank of Canada is willing to raise interest rates "forcibly if necessary" to combat growing consumer prices. In March, annual inflation rose faster than projected, reaching a 31-year high of 6.7%. The Bank of Canada has already raised its overnight rate target by 125 basis points to 1% this year and has foreshadowed more hikes as the economy enters excess demand and inflation remains well above the target.

  • Monday 05/09/2022 - Building Permits (Mar)
  • Thursday  05/12/2022 - BOC Gravelle Speech 

MXN

The Mexican Peso closed 0.56% higher in the previous session before losing its momentum slightly against the greenback on Monday morning. In doing so, the Mexican Peso traded up from a 6-week low after state oil firm Pemex reported a $6.17 billion first-quarter net profit, reversing the previous year's losses. Furthermore, In terms of monetary policy, Mexico's central bank raised interest rates for the seventh time in a row in March, to 6.5%, in an effort to reduce inflationary pressures caused by the Ukraine conflict. In other news, Mexico's President Andres Manuel Lopez Obrador announced on Sunday that he will ask U.S. President Joe Biden to include Cuba in the next Summit of the Americas.

  • Monday 05/09/2022 - 12 months Inflation (Apr)
  • Thursday  05/12/2022 - Industrial Output (Mar) | Banxico interest rate decision 

CNY

The Chinese Yuan closed 0.10% lower against the greenback in the previous session. On Monday, the Yuan sank against the U.S. dollar, reaching new 18-month lows and extending significant losses from April, as concerns about a global economic slowdown and forecasts of increased interest rates throughout the world drove investors into the safety of the dollar. China's uncompromising dedication to its zero-tolerance attitude to Covid weighed on the currency as Shanghai authorities prolonged lockout restrictions until late May, while Beijing increased mass testing into an almost daily habit. According to the most recent data, Chinese export growth dropped to its slowest in nearly two years in April, while imports barely changed as tighter and wider Covid-19 regulations stalled manufacturing production and hurt domestic demand. Elsewhere, economists are lowering their full-year GDP growth prediction for China to reflect the economic damage caused by the country's Covid issue, putting negative pressure on the currency.

  • Monday 05/09/2022 - Trade Balance (Apr)  
  • Tuesday 05/10/2022 - FDI and Money supply (Apr) 
  • Wednesday  05/11/2022 - Consumer Price Index (Apr) 

BRL

The Brazilian Real plunged 1.05% against the greenback in the previous session. The U.S. dollar surged higher on Friday after the release of the U.S. jobs report, which supported the assumption that the U.S. Central Bank will raise interest rates in the coming months. That being said, The Brazilian real fell further, touching its lowest level since mid-March, and was down more than 2.6% for the last week, also dragged down by decreased iron ore prices, one of the country's main exports. In addition, the Brazilian central bank raised rates by 100 basis points last week, the eleventh month of rises, increasing borrowing costs to their highest level since February 2017. The central bank expects the cycle to continue, but with a smaller correction.

  • Monday 05/09/2022 - BCB focus market readout 
  • Tuesday 05/10/2022 - Retail Sales (Mar) | BCB COPOM meeting minutes
  • Wednesday  05/11/2022 - IPCA Inflation (Apr)
  • Friday  05/13/2022 - IPC-Br Economic Activity | CFTC BRL speculative net positions 
 

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