Inflation fears abate but investors see dollar benefiting
The US dollar is stronger again today after rallying late yesterday on the back of higher US Treasury bond yields. The Fed seems poised to move forward with tapering which is helping to support the demand for US dollars. The UK pound is weaker despite payrolls growing more than expected in September. The Chinese renminbi gave back some of Monday’s gains on news there will be corruption reviews of financial regulators.
This week's economic news:
Tuesday: Jolts Job Openings for August (F 10.9M)
Wednesday: Consumer Price Index for Sept. (F 5.3%), FOMC meeting minutes from Sept 22
Thursday: Initial Jobless Claims for week of Oct. 9, Producer Price Index for Sept. (F 8.7%)
Friday: Retail Sales for September, University of Mich. Consumer Sentiment for October
October 12, 2021
EUR/USD 1.1543 GBP/USD 1.3611 USD/CAD 1.2463 AUD/USD 0.7368 USD/JPY 113.6800 USD/CNH 6.4503 USD/ILS 3.2316 USD/MXN 20.8322 USD/CHF 0.9303 USD/INR 75.5175 USD/BRL 5.5385 USD/SGD 1.3568 USD/DKK 6.4473 USD/SEK 8.7611 USD/NOK 8.5469
The US dollar faces a busy week of economic releases with CPI tomorrow and Retail Sales closing out the week. FX market participants see mostly support for bullish dollar positions in the coming weeks as the Fed will most likely continue to signal a pullback in Treasury and mortgage bond purchases (tapering).GBP
The pound is weaker despite UK payrolls rising above pre-coronavirus levels last month - an indicator of the strength in the UK labor market. Payrolls rose by a new record of 207k last month. ONS figures showed job vacancies rose to 1.2 million, also an all-time high. This gain is likely to absorb most of the one million workers who remained furloughed after the end of the scheme last month.EUR
The euro continues to trade near lows last seen in summer 2020. The dollar bull story - with the Fed likely to move forward with tapering- is strong enough to keep euro bulls away.CAD
The Canadian dollar is flat vs. the US dollar as commodity currencies continue to do well. The price of oil and all energy products remains elevated as the recovering global economy strains the return to pre-pandemic supply levels.ASIA/PACIFIC
The Chinese renminbi weakened since Friday although is off overnight lows. Chinese authorities announced an anti-corruption review of large banks and financial regulators causing the renminbi to sink yesterday. A report that Beijing is widening scrutiny to include regulators caused the Nikkei, Hang Seng and CSI to drop 0.94%, 1.43% and 1.06% respectively.
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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