US Treasury yields are higher following bond yields in Europe after Eurozone CPI data for May came in at 8.1%. The dollar is stronger on the increase in Treasury yield, month-end positioning, and lastly, on general risk-off sentiment. European Union leaders agreed to a significant reduction in the purchase of Russian oil sending crude prices higher.
Economic Data this Week:
Wednesday: ISM data for May, JOLTS Job Openings, Fed Beige Book
Thursday: ADP Employment Change for May, Weekly Initial Jobless Claims
Friday: Nonfarm Payrolls for May (+325K forecast), ISM Services for May
May 31, 2022
EUR/USD 1.0707 GBP/USD 1.2576 USD/CAD 1.2660 AUD/USD 0.7162 USD/JPY 128.74 USD/CNH 6.6663 USD/ILS 3.3371 USD/MXN 19.6153 USD/CHF 0.9595 USD/INR 77.6362 USD/BRL 4.7177 USD/SGD 1.3721 USD/DKK 6.95 USD/SEK 9.8292 USD/NOK 9.4355
The US dollar is stronger after the long weekend as sentiment weakened due to higher than expected inflation numbers out of the Eurozone and a surge in the price of oil. This morning's March reading of the S&P CoreLogic 20-city house price index showed a year-over-year gain of 21% beating the 20% estimate.
Conference Board Consumer Confidence and Dallas Fed Manufacturing Activity for May due later this morning.GBP
The British pound is weaker in the face of overall dollar strength. The UK is still wrestling with the aftermath of Brexit some six years after the vote to leave the EU. Investors see the UK economy facing a headwind for the foreseeable future as politics and trade cloud the investment outlook and direction of the British pound.EUR
The euro lost ground on overall US dollar strength. Eurozone inflation for May came in at 8.1% YoY which was higher than expected (+7.8%). Implied probability of the ECB’s benchmark rate being at least +0.50% by year-end now sits at 100%.CAD
The Canadian dollar lost ground to the US dollar on overall US dollar strength. Canada’s first quarter GDP number came in at +3.1% vs the 5.2% expected. Also, the price of oil continued to climb as European Union leaders agreed to ban the import of Russian oil via sea routes – leaving oil imported by pipeline in place – for now. The new ban effects 90% of oil imports from Russia to the EU and will be in place by year end.ASIA/PACIFIC
The Chinese renminbi gained after Beijing announced reduced mobility restrictions.
The Japanese yen weakened as higher US Treasury yields led to investors in Japan buying Treasuries.
This article is intended for U.S. audiences only.
©2022 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.