China, South Korea, and Indonesia are taking steps to help support their currencies as trade war tensions rise
May 23, 2019
Yesterday, the markets were in a more risk-off view. The dollar strengthened this morning as New York markets opened. Brexit remains in the news as there is a lack of support for it in the present form.
- Lao Tzu
“Do the difficult things while they are easy and do the great things while they are small. A journey of a thousand miles must begin with a single step.”
May 23, 2019
EUR/USD 1.1119 GBP/USD 1.2636 USD/CAD 1.3498 AUD/USD 0.6871 USD/JPY 109.91 USD/CNH 6.9383 USD/ILS 3.6165 USD/MXN 19.0544 USD/CHF 1.0086 USD/INR 70.0188
Yesterday, the Fed minutes from the last meeting were released. They continue to err on the side of caution with a "steady-as-we-go" philosophy. The recent slip in inflation was seen as transitory, and there was no mention of a future interest rate cut.GBP
The pound remains under pressure as Theresa May suffered another problem: UK House of Commons leader Andrea Leadsom resigned, saying she is not able to support the PM’s handling of Brexit. The Prime Minister is trying to avoid resigning due to the lack of support from her own party.EUR
The euro declined for a third day, eyeing new YTD lows, after data showed growth in the region remain subdued. PMI came in at 47.7, vs. the expectations for 48.1. However, losses were contained as demand vs. the pound offered support.CAD
Despite favorable economic data, the loonie is set for a second day of losses. It is falling against all other G10 counterparts as oil continues to sink due to trade tensions between US and China, which is softening demand.ASIA/PACIFIC
Amid escalating US-China trade tensions, the Japanese yen continues to strengthen for a second day, encouraging Japanese investors to shop for bonds abroad.
FX strategists see a low likelihood of USD/CNH breaching 7.00, as authorities have signaled to markets that this remains as a strong line of defense for now. According to StanChart, authorities are seeking stability of the yuan vs. strength against the dollar.
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