USD is in demand this morning as risk sentiment erodes. Tensions between Russia and Ukraine have global powers on edge. Pres. Biden is considering deploying troops to NATO allies in eastern Europe and the Baltics. Fear of impending rate hikes this year weigh further on equity markets as the Nasdaq continues to decline. Volatility will remain high this week as investors continue to digest the market landscape.
Economic Data this Week:
Monday: Markit PMI, FR Markit manufacturing
Tuesday: IFO Business Climate
Wednesday: FOMC Rate decision, Bank of Canada rate decision
Thursday: Jobless Claims, US Durable Goods
Friday: Univ. of Michigan sentiment
January 24, 2022
EUR/USD 1.1296 GBP/USD 1.3472 USD/CAD 1.2639 AUD/USD 0.7107 USD/JPY 113.85 USD/CNH 6.333 USD/ILS 3.1783 USD/MXN 20.5652 USD/CHF 0.9145 USD/INR 74.5687 USD/BRL 5.4923 USD/SGD 1.3466 USD/DKK 6.5895 USD/SEK 9.3235 USD/NOK 9.0043
The greenback hits two-week highs as equities drop and treasury yields flatten in anticipation of Wednesday’s Fed decision. Markets will pay close attention to any signal that the Fed could raise rates more than four times in 2022 in efforts to tamper inflation as CPI hit 7% YOY – the fastest pace in 40 years. Traders price in a 95% chance of a rate increase in March.GBP
The pound sheds nearly 0.60% to January lows amid dollar strength. The pound gave back all gains acquired since the start of the year.EUR
The euro also gave back nearly 0.50% to the dollar as the common currency is weighed down by tensions between Russia and Ukraine. Given the eurozone gets 50% of oil supplies from Russia there are concerns that some eurozone nations may be unwilling to take a stand vs. Moscow. The Swiss franc hit the highest level since June 2015 as save havens outperform.CAD
Canadian dollar loses ground vs. the greenback amid eroded risk sentiment offsetting any hawkish sentiment spurred by BoC meeting this week. Crude oil prices are set for a third day of losses.ASIA/PACIFIC
USD/JPY climbs slightly as safe haven currencies outperform and treasury yields sink.
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
By providing your email address and clicking on the Subscribe button below, you consent to receive emails from Silicon Valley Bank for your chosen categories. You also consent to the terms of our Privacy Notice. If you have privacy questions, you may contact us at PrivacyOffice@svb.com. You can withdraw your consent at any time.
Thank you for subscribing to SVB's Daily FX Update.
You're almost done. Please check your email box and follow the instructions to confirm your subscription. If you did not receive an email please check your Spam or Bulk E-Mail folder just in case the confirmation email got delivered there instead of your inbox. If so, select the confirmation message and mark it Not Spam, which should allow future messages to get through. Please add us to your trusted list of senders, contacts or address book.
Please note that we will continue to send you communications that we need to send you (for example, to keep you updated on operational changes to your account, a product or a service) or that we are required to send you by law.
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.