Financial markets will be looking for signs the Fed's new Quantitative Tightening (QT) measures will impact interest rates, money supply and the value of the dollar. With Fed interest rate increases mostly priced into current FX rates, trading around potential QT impact will drive financial markets. QT begins this month with initial reduction in money supply starting June 15 as some of the Fed’s bond holdings mature.
"The future belongs to those who believe in the beauty of their dreams."
-
FX Rates
June 1, 2022Rates 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 1.0724 GBP/USD 1.2560 USD/CAD 1.2616 AUD/USD 0.7227 USD/JPY 129.38 USD/CNH 6.6695 USD/ILS 3.3309 USD/MXN 19.6357 USD/CHF 0.9605 USD/INR 77.5287 USD/BRL 4.7586 USD/SGD 1.3710 USD/DKK 6.9379 USD/SEK 9.7646 USD/NOK 9.3508
-
USD
The dollar is slightly up as we write. President Biden met Powell yesterday to stress the Fed’s independence and their mandate to tame inflation. The White House is assessing measures to mitigate inflation including easing tariffs.
JOLTS Job Openings for April expected later this morning with forecast at 11.3 million vs last month’s 11.5M – which was a record. Also, later this morning the ISM Manufacturing data for May will be released.
GBPThe pound is slightly weaker vs. the US dollar. The cost-of-living crisis and increasing mortgage rates may have moderated house prices in the UK. Consensus sees house prices rising 10.5% YoY slowing from April’s 12.1%. Speculation has begun over the number of no-confidence motions tabled against Boris Johnson. The process within the conservative party is anonymous, with wargaming beginning on the outcome of a possible no-confidence vote.
EURThe euro is slightly weaker compared to the US dollar after European Central Bank Governing Council member, Edward Scicluna, said there may not be enough support for a 50 basis point increase in the ECB’s benchmark interest rate.
CADThe Canadian dollar headed toward a fifth day of gains as the price of oil remains high. Although OPEC+ is considering effective production increases, demand for oil is expected to remain high supporting prices of over $100/bbl. Bank of Canada's rate decision is expected later this morning with forecast showing a 0.50% increase to 1.50%.
ASIA/PACIFICThe Australian dollar gained when Australia’s three-year bond yield rose following data showing that the economy expanded faster than forecasted in the first quarter. These figures could bolster the case of the RBA to raise rates further this year.
The Japanese yen has weakened to a two-week low, slipping past 129 per dollar today. This comes following months of weakening in the yen as higher interest rates in the United States draw investors from Japan.
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
Source: Bloomberg | |
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. |