Market participants weigh tightening monetary policy with still robust labor markets. FX markets reflect risk sentiment with bids for US dollar, yen and Swiss franc indicating some investors have concerns of a global recession. PMI data show a slowing but remain above the 50 reading indicating expansion.
The central bank of Norway surprised markets with a 50bps rate increase to 1.25% joining other central banks who have made similar moves to stem inflation.
“Money is always eager and ready to work for anyone who is ready to employ it.”
June 23, 2022
Rates are not real time. Rates are today's indicative mid-market rates as of time of publishing, which may vary. Please contact SVB for a current quote.
EUR/USD 1.0518 GBP/USD 1.2250 USD/CAD 1.2962 AUD/USD 0.6909 USD/JPY 134.88 USD/CNH 6.7006 USD/ILS 3.4489 USD/MXN 20.0605 USD/CHF 0.9607 USD/INR 78.29 USD/BRL 5.1797 USD/SGD 1.3890 USD/DKK 7.0690 USD/SEK 10.1837 USD/NOK 9.9750
USDThe dollar was well bid overnight but gave back gains as some see the risk of a mild recession as already priced into risk assets.
Jerome Powell vowed to keep raising rates until there was ‘compelling evidence' of falling inflation, he told Congress on Wednesday. The Fed’s target rate is expected to rise above 3% this year, in order to soften demand and cool price increases.GBPThe British pound is slightly weaker despite UK composite PMI for June coming in unchanged from the prior month at 53.1, which beat the forecast of 52.4.
Some senior MPs raised the alarm over sterling weakness, stating that it could exacerbate the cost-of-living crisis. They are worried about cost-push inflation on imports impacting businesses and consumers.EURThe euro weakened as German and French composite PMI for June came in weaker than expected but remain above 50. Eurozone PMI has yet to be pushed into contractionary territory despite the war in Ukraine.
Emmanuel Macron acknowledged in his first public address since the weekend's elections that he’ll have to negotiate with rivals. He will have to diligently navigate a political arena that has become increasingly polarized, potentially holding talks with right winger Marine Le Pen.CADThe Canadian dollar is slightly weaker and remains below crucial 1.30 level. The price of oil continues to be very volatile with large swings throughout the trading day. While supply is expected to remain very tight around the globe, demand is questioned due to possibility of recession.ASIA/PACIFICThe Japanese yen rose for a second day as some FX traders see the sell-off as having gone too far. Also, lower US Treasury yields helped the yen.
The Philippines raised its key rate by 25 bps to 2.5%. Indonesia held rates at 3.5%. Singapore’s inflation accelerated to 5.6% in May from 5.4% in April, driven by rising costs of imported food and fuel.
For more analysis on FX markets or information regarding SVB's FX services:
See all of SVB's latest FX information and commentary at www.svb.com/foreign-exchange-advisory
This article is intended for U.S. audiences only.
©2023 SVB Financial Group. All rights reserved. Silicon Valley Bank is a member of the FDIC and the Federal Reserve System. Silicon Valley Bank is the California bank subsidiary of SVB Financial Group (Nasdaq: SIVB). SVB, SVB FINANCIAL GROUP, SILICON VALLEY BANK, MAKE NEXT HAPPEN NOW and the chevron device are trademarks of SVB Financial Group, used under license.
The views expressed in this email are solely those of the author and do not reflect the views of SVB Financial Group, or Silicon Valley Bank, or any of its affiliates. This material, including without limitation the statistical information herein, is provided for informational purposes only. The material is based in part upon information from third-party sources that we believe to be reliable, but which has not been independently verified by us and, as such, we do not represent that the information is accurate or complete. The information should not be viewed as tax, investment, legal or other advice nor is it to be relied on in making an investment or other decisions. You should obtain relevant and specific professional advice before making any investment decision. Nothing relating to the material should be construed as a solicitation or offer, or recommendation, to acquire or dispose of any investment or to engage in any other transaction.
Foreign exchange transactions can be highly risky, and losses may occur in short periods of time if there is an adverse movement of exchange rates. Exchange rates can be highly volatile and are impacted by numerous economic, political and social factors, as well as supply and demand and governmental intervention, control and adjustments. Investments in financial instruments carry significant risk, including the possible loss of the principal amount invested. Before entering any foreign exchange transaction, you should obtain advice from your own tax, financial, legal, accounting and other advisors, and only make investment decisions on the basis of your own objectives, experience and resources.