Risk-on hits US dollar and helps commodity currencies
The dollar is stronger versus the safe haven Japanese yen and Swiss franc, but weaker against commodity currencies such as the Australian dollar. FX markets will be watching the Federal Reserve’s FOMC statement and press conference on Wednesday for any comments on inflation expectations. The US dollar has steadily lost ground versus a basket of currencies since the start of April.
Economic Data for this Week:
Tuesday: S&P House Price Data for February, Conference Board Consumer Confidence for April
Wednesday: FOMC Rate Decision
Thursday: Weekly Initial Jobless Claims, Q1 GDP and PCE deflator index
Friday: Personal Income for March, PCE for March, Consumer Confidence for April
April 26, 2021
EUR/USD 1.2077 GBP/USD 1.3885 USD/CAD 1.2441 AUD/USD 0.7793 USD/JPY 108.02 USD/CNH 6.4865 USD/ILS 3.2391 USD/MXN 19.8433 USD/CHF 0.9155 USD/INR 74.7262 USD/BRL 5.4711 USD/SGD 1.3262 USD/DKK 6.1565 USD/SEK 8.3853 USD/NOK 8.2945
The US dollar is generally weaker to start the week as commodity currencies gain and Durable Goods Orders for March (+0.05%) came in weaker than expected (+2.3%). The Bloomberg US dollar spot index hit a two-month low overnight as the price of copper hit a 10-year high and iron ore surged. Risk-on sentiment is hurting the dollar as equity markets climb and investors look beyond the surge in Covid cases in places like India and Brazil.GBP
The pound is flat versus the dollar this morning after having been significantly higher during London trading. Speculators may be adding to already sizable long-pound/short-dollar positions as the UK has now vaccinated half its population and investors look toward significant growth over the next couple quarters.EUR
The euro gave back early gains which showed the common currency trading above 1.21. The euro is up 3% versus the greenback for the month. Germany’s IFO index for April was weaker than expected causing FX speculators to sell the euro thereby locking in gains.CAD
The increasing price of commodities, especially copper, lifted the Canadian dollar relative to most currencies. Covid concerns took a back seat as investors look beyond vaccine roll out and position for strong commodity prices and a strong Canadian dollar.ASIA/PACIFIC
The Indian rupee held its ground just below 75 despite a surge in Covid cases and deaths over the weekend. Prime Minister Modi has yet to call for a nationwide lockdown although some local authorities have announced restrictions.
The Japanese yen is down 4.5% versus the US dollar for the year mostly as safe haven currencies have been weaker. The Australian dollar surges on higher iron ore prices.
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/trends-insights/foreign-exchange-advisory
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