Higher inflation data yesterday and today combined with fear of a protracted Russian/Ukrainian war sent the US dollar higher. The Japanese yen is back at 20-year lows after the Bank of Japan affirmed loose monetary policy. The price of oil increased and is now 10% higher over the past two days. Bank of Canada meets later this morning and is expected to hike interest rates by 50bps.
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April 13, 2022
EUR/USD 1.0824 GBP/USD 1.3015 USD/CAD 1.2655 AUD/USD 0.7405 USD/JPY 125.77 USD/CNH 6.3670 USD/ILS 3.2166 USD/MXN 19.8121 USD/CHF 0.9336 USD/INR 76.1837 USD/BRL 4.7005 USD/SGD 1.3644 USD/DKK 6.8707 USD/SEK 9.5463 USD/NOK 8.8469
The US dollar is up on safe haven buying and on expectations the Federal Reserve will have to aggressively raise interest rates to combat higher inflation. This morning's PPI data for March came in at 11.2% YoY which is the highest since 2010.GBP
The British pound is at the weakest level since Q4 2020. UK inflation surged to 7% in March, the highest level in three decades as the cost-of-living crisis continues to threaten the economic recovery from the pandemic. The reading was the sixth consecutive print above expectations, driven by an increase in fuel, metals and used car prices. Economists predict the rise will continue as the increase in household energy bills take effect this month.EUR
The euro has broken through the lows of this past March (1.0875) and may test the lows reached during the initial scare of the pandemic. The longevity of the Ukraine/Russia conflict has heightened concerns of a longer war and the potential for the conflict to spill over into other countries. EUR/USD dropped yesterday afternoon after Vladimir Putin cited that peace talks are at a “dead end”.CADThe Canadian dollar is weaker this morning despite the price of oil increasing to well over $100/bbl. Later this morning, the Bank of Canada is widely expected to increase its overnight benchmark rate by 50bps. The rate hike is priced into markets, so it may not move the FX rate unless Canadian officials suggest a faster and higher path of interest rate increases.ASIA/PACIFIC
The Bank of New Zealand raised rates 0.5%, the biggest rise in 22 years as price pressures continue to influence policy. The NZD/USD gained 0.7% initially on the release, however, has reversed since.
The Indian rupee sank after the nation's February Industrial Production figures (+1.7%) missed estimates (+2.7%) and suggest further headwinds for the Indian economy.
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