Dollar mixed; Atlanta Fed Index lower than expected
Laurence Hayward | May 20, 2019
Volatility in Emerging Market currencies continued the dollar’s two-week strengthening trend. Nervousness over a trade war between the US and China is keeping markets on edge, but an uptick in the mood for risky assets has driven some dollar sellers back into the market.
Monday: March Final Japanese Industrial Production, German April PPI, US Chicago Fed Activity Index
Tuesday: OECD Economic Outlook, UK CBI Trend Reports, Eurozone Consumer Confidence, US Existing Home Sales, April Japanese Trade Balance
Wednesday: UK April CPI, Retail Price Index and PPI, Canadian Retail Sales, May 1st FOMC minutes, Japanese Preliminary May Manufacturing PMI
Thursday: German Final Q1 GDP, May Preliminary Manufacturing PMI, US May Preliminary Manufacturing PMI, April Home Sales
Friday: UK April Retail Sales, US Durable Goods Orders
May 20, 2019
EUR/USD 1.1166 GBP/USD 1.2732 USD/CAD 1.3424 AUD/USD 0.6916 USD/JPY 109.93 USD/CNH 6.9453 USD/ILS 3.5790 USD/MXN 19.1094 USD/CHF 1.0087 USD/INR 69.7413
President Trump said that the EU, in terms of trade, treats the US worse than China. He also raised tensions with Iran by tweeting "If Iran wants to fight, that will be the official end of Iran.”
The Chicago Fed Activity Index fell to -0.454 from 0.05 in March. Attention will be redirected to upcoming Fedspeak where inflation numbers remain the center of the debate.GBP
The pound continued its decline as the breakdown in Brexit talks dragged on the currency. Opposition Brexit spokesman Kier Starmer said the government will have to include a public vote in any Brexit agreement. PM Theresa May said the revised withdrawal agreement will include new and improved measures, but Jeremy Corbyn has stated that there is no indication it will be changed much from the last bill. When PM Theresa May steps down, it looks as if Boris Johnson - the ex-Lord Mayor of London - could take her place.EUR
Klaas Knot of the ECB said EU inflation is not where the ECB wants it to be. Knot added “The only thing we can do is to keep the pressure up, to make sure the economy continues to perform at high levels of capacity utilization and the economy continues to print GDP numbers in excess of potential growth”.
Austria has called an unexpected election as the Vice Chancellor had to resign due to news he had promised government contracts in return for campaign funding.
April German PPI rose to 0.5% m/m from -0.1% in March and to 2.5% y/y from 2.4%.CAD
The Canadian markets are closed today for the Victoria Day holiday.ASIA/PACIFIC
The Japanese Q1 GDP rose to 2.1% due to a drop in imports. The Australian dollar strengthened after the unexpected election victory of the center-right coalition, which caused a 1% rise in the AUD.
With US-China trade talks at a deadlock, attention has shifted to the Chinese government and its likeness to intervene with the yuan as it is approaching the 7.00 psychological mark.
The Indian Rupee strengthened after Modi won the Indian election.
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