The dollar is giving back yesterday’s modest gains despite global investors shifting toward a defensive strategy. Yesterday, Fed Chair Jerome Powell concluded two days of testimony before the Senate Banking Committee where his comments stressed the importance of bringing inflation down to the Fed's 2% target – even if it means causing a recession. Safe-haven Japanese yen and Swiss franc are stronger as FX traders and investors position for more challenging economic conditions.
“Without the weekend, where would the week be?”
June 24, 2022
EUR/USD 1.0535 GBP/USD 1.2282 USD/CAD 1.2965 AUD/USD 0.6911 USD/JPY 135.08 USD/CNH 6.6840 USD/ILS 3.4300 USD/MXN 19.9005 USD/CHF 0.9545 USD/INR 78.33 USD/BRL 5.2523 USD/SGD 1.3880 USD/DKK 7.0564 USD/SEK 10.1395 USD/NOK 9.8915
The dollar is weaker to close out the week. Swap markets are signaling that the market now sees the Fed hike cycle peaking in March. Current expectations are a 75 bps increase to be followed by a 50 bps increment, as the Fed aims to regain control of the inflation narrative.
University of Michigan Consumer Sentiment for June and New Home Sales for May are due out later this morning.GBP
The pound gained on the day and the week with FX markets looking for comments later today from Bank of England officials. UK consumer confidence dipped in June to a record low amid surging prices. GfKs sentiment survey dropped to -41, the lowest reading in 48 years. Retail Sales for May fell 0.5% MoM beat expectations (-0.7%), down from a 1.4% gain the previous month.EUR
The euro gave up earlier gains after European Central Bank board member, Guindos, said economic growth in the eurozone could turn negative in 2023. Germany’s IFO survey could show a second month of outlook improvement with the expectations gauge seen rising to 87.4. The EU granted Ukraine candidate status in a historic first step to membership.CAD
The Canadian dollar weakened significantly throughout the trading day yesterday as investors favored haven currencies. The C-dollar is regaining some of yesterday’s loss in morning trading on the back of stronger oil prices. West Texas Intermediate is trading at $106/bbl and headed for the first monthly loss since November.ASIA/PACIFIC
The yen saw buying as FX traders took more defensive positions. Japan’s key inflation rate was unchanged at 2.1% in May staying above the BOJ’s 2% target.
The Chinese renminbi weakened for a second day vs. the US dollar. The PBOC injected $7.5 billion dollars in its biggest cash infusion since March 31, providing stimulus for an economy which in recent months has been stricken with omicron outbreaks.
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