The US dollar has fallen almost 2% since its peak on May 13. Dollar bulls bet the greenback would climb as the Fed signaled more and bigger rate hikes to come. This week investors saw signs of economic weakness and pulled back on equities and the US dollar. Triple witching Friday will see a large amount of option expiration today possibly leading to volatility across financial markets.
“If you fell down yesterday, stand up today.”
May 20, 2022
EUR/USD 1.0563 GBP/USD 1.2489 USD/CAD 1.2795 AUD/USD 0.7057 USD/JPY 128.01 USD/CNH 6.6847 USD/ILS 3.3450 USD/MXN 19.8575 USD/CHF 0.9741 USD/INR 77.5462 USD/BRL 4.9111 USD/SGD 1.3794 USD/DKK 7.0454 USD/SEK 9.9362 USD/NOK 9.7383
The dollar is flat in morning trading following yesterday’s selloff which was the worst single day since 2020. No significant economic data today but option expiry may cause large swings in the financial markets throughout the day.GBP
The British pound is weaker vs. the US dollar despite UK April Retail Sales (-4.9%) coming in better than expected (-7.0%). The Metropolitan police announced the end of its ‘party gate’ fines, with the prime minister avoiding any further fines.EURChancellor Olaf Scholz's policy to boost the German military is struggling to gain traction. A vote of his €100 billion defense package has been postponed as his coalition struggles to agree. EUR/USD trades lower -0.14%, the Euro STOXX opened positive by 0.7%.CAD
The Canadian dollar is stronger in morning trading as the price of oil maintained recent gains. The EU has yet to agree on a ban on the purchase of Russian oil and China is rumored to be buying Russian crude. Despite the potential addition to supply, the price of oil remains strong.ASIA/PACIFIC
The Chinese renminbi gained 1.5% since yesterday afternoon as investors plowed back into Chinese assets. The authorities in China signaled an easing of COVID related restrictions in the Shanghai area potentially relieving a key chokehold on the local economy and supply chains. Overnight, the Peoples Bank of China lowered a key interest rate providing relief to financial markets.
Japan’s inflation sped up in April to 2.1% YoY, topping the BOJs target, reaching its fastest rate in 14 years.
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