.png){kind=logo}
The dollar gains as the FX markets take their cue from bond markets which continue to sell off. US Inflation data on Thursday (PCE) and jobs data on Friday (+490K) will likely reinforce expectations the Fed will consider raising rates by 50bps at their next FOMC meeting in May. However, Japan has announced targeted JGB buying to tap down higher rates thereby leading to further weakness. The yen which has lost 7.5% relative to the USD since the start of March.
Economic Data this Week:
Tuesday: JOLTS Job Openings for February, S&P CoreLogic house prices for January
Wednesday: ADP Employment Change for March and MBA Mortgage Applications
Thursday: PCE Deflator for February, Weekly Initial Jobless Claims, Personal Spending
Friday: Nonfarm Payrolls, Average Hourly Earnings, ISM, Unemployment Rate – all for March
-
FX Rates
March 28, 2022Rates are not real time. Rates are today's indicative mid-market rates as of time of publishing, which may vary. Please contact SVB for a current quote.
EUR/USD 1.0955 GBP/USD 1.3094 USD/CAD 1.2526 AUD/USD 0.7484 USD/JPY 123.82 USD/CNH 6.3874 USD/ILS 3.2231 USD/MXN 20.0861 USD/CHF 0.9351 USD/INR 76.1650 USD/BRL 4.7857 USD/SGD 1.3611 USD/DKK 6.7884 USD/SEK 9.5448 USD/NOK 8.7128
-
USD
The dollar is stronger compared to almost every currency. Inflation and employment data are due this week and are expected to strengthen the case for larger rate hikes. The PCE report, released Thursday, is expected to show that inflation accelerated. Employment figures, due Friday, are expected to again show strong gains (+495K). The gap between five-year and 30-year yields inverted for a short time overnight for the first time since 2006.
GBPThe British pound hit a low of 1.3027 on March 14 before rebounding to 1.3252. Weakness is again hitting GBP and some FX traders expect the pound to test the recent lows. Bond yields in the UK, although up significantly, have not risen as much as US Treasuries providing a lift to the greenback.
EURThe euro is sinking on overall US dollar strength. German 10yr government bonds are still well below 1% whereas the US 10yr touched 2.5% overnight. Lagarde has announced that European data does not currently point to a material risk of stagflation. According to the ECB Chief, Eurozone output has recovered to pre-pandemic levels, growth has resumed, and the labor market is strong, also hinting that net asset purchases may end in the third quarter.
CADThe Canadian dollar is slightly weaker this morning as the price of oil is down 5%. CAD remains relatively strong having gained 3% vs. the greenback since mid-March. The Federal Reserve and Bank of Canada have similar plans to raise interest rates, so any strength or weakness in the FX rates seems to be coming down to the price of oil.
ASIA/PACIFICThe Japanese yen has dropped following the BOJ's announcement that it will purchase an unlimited amount of 10-year bonds. The central bank of Japan is actively seeking lower longer-term rates while bond yields in the US and elsewhere are allowed to rise.
Chinese yuan is at its weakest point in two weeks following announcements that the city of Shanghai will begin a 4-day lockdown. There is concern the COVID-related measures will hurt the Chinese economy and spill over into the global economy.
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
Subscribe to receive the Daily FX Update in your inbox.
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.
| Source: Bloomberg | |
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. |
