Renminbi, loonie lead and safe havens sell off as developed economies gain strength
Better than expected economic data in the US supported the dollar against fellow safe havens, the Swiss franc, and euro. The Chinese renminbi strengthened again to another three-year record. Month end positioning may cause some volatility coming into the Memorial Day weekend. The Canadian dollar is heading toward 1.20 to the dollar – not seen since 2015.
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May 27, 2021
EUR/USD 1.2188 GBP/USD 1.4171 USD/CAD 1.2068 AUD/USD 0.7740 USD/JPY 109.48 USD/CNH 6.3825 USD/ILS 3.2453 USD/MXN 19.9021 USD/CHF 0.9001 USD/INR 72.5875 USD/BRL 5.2932 USD/SGD 1.3242 USD/DKK 6.1009 USD/SEK 8.3021 USD/NOK 8.3568
Headline Durable Goods orders for April came in (-1.3%) worse than expected (+0.8%), but the Capital Goods orders which excludes defense and aircraft came in at +2.3% vs. the +1.0% expected. Initial Jobless Claims and Continuing Jobless Claims for last week also came in better than expected. Core PCE was +2.5% for Q1 which was higher than the 2.3% expected.GBP
The pound is stronger today after a member of the Monetary Policy Committee of the Bank of England, Gertjan Vlieghe, suggested interest rates may need an increase early next year if the labor market recovers smoothly.EUR
The euro weakened as FX market speculators see less likelihood of a change in policy by the European Central Bank when it meets June 10th.
Switzerland confirmed they will not sign the EU framework agreement, citing substantial differences. The framework unveiled in 2018, is the basis for Switzerland’s continued access to the single market. Without an agreement, Switzerland will be reduced to “third country” status, putting the 250 billion CHF goods-trading relationship at significant risk.CAD
The Canadian dollar strengthened and is headed to the 1.20 level last seen in 2015. The price of oil gained on stronger than expected US economic data.ASIA/PACIFIC
The renminbi strengthened yet again as the Biden administration held their first trade talks with China since taking office in January. Talks were said to be constructive and pragmatic.
The Japanese yen lost ground as safe havens sold off and US Treasury yields climbed. The markets sold Treasuries after Fed officials calmed fears about inflation.
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