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The US dollar gained to begin the week as investors gear up for corporate earnings which many believe will come with a reduced profit outlook. Two-year US Treasury yields remained above the 10-year (inverted yield curve) signaling possible recession in the US. The price of oil slipped and the euro heads closer to parity with the US dollar.
Economic Data this Week:
Wednesday: CPI for June
Thursday: PPI for June, Weekly Initial Jobless Claims
Friday: Retail Sales and Industrial Production for June, University of Michigan Consumer Sentiment for July
July 11, 2022
EUR/USD 1.0083 GBP/USD 1.1884 USD/CAD 1.2991 AUD/USD 0.6742 USD/JPY 137.35 USD/CNH 6.719 USD/ILS 3.4792 USD/MXN 20.7507 USD/CHF 0.9796 USD/INR 79.4375 USD/BRL 5.3498 USD/SGD 1.404 USD/DKK 7.378 USD/SEK 10.596 USD/NOK 10.1739
The dollar continues to gain on most currencies on overall risk-off sentiment. The US Federal Reserve is expected to raise interest rates 0.75% later this month regardless of how weak economic data is between now and the FOMC meeting.GBP
The pound is 1% weaker versus the US dollar with the rate now below 1.19. With Prime Minister Johnson having announced his resignation, many investors do not see the pound rebounding until a new PM is appointed.EUR
The euro is trading closer to parity as the US dollar enjoys safe-haven status. Fears of a recession in the eurozone are higher than that for the US due to the precarious position for European energy supplies – especially those coming from Russia.CAD
The Canadian dollar tumbles alongside its G-10 peers as risk-off trading permeated markets at the onset of today’s US trading session. Expectations of a 75bps rate hike mount at this Wednesday’s Bank of Canada meeting which many experts translate to a bullish medium-term outcome for the currency. Also, on Saturday, Canada announced further sanctions on Russia to include industrial manufacturing.ASIA/PACIFIC
The Chinese renminbi lost ground as China has reintroduced COVID restrictions amid a resurgence of cases of the more infectious Omicron variant, with 11 cities now under full or partial lockdown. Restrictions continue to weigh on the economy with consumer prices rising 2.5% in June.
The yen declined to 24-year lows against the US dollar following the election victory for Japan’s ruling bloc as investors sold JPY over the likely continuation of loose monetary policy.
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