The dollar continued weakening despite June CPI data coming in above expectations
Peter Compton " | July 11, 2019
Yesterday’s dollar bearishness continued today stemming from Fed Chairman Jerome Powell’s dovish comments. A general “risk-on” sentiment buoyed financial markets which now expect the Fed to cut rates twice for a total of 0.50% over the balance of this year. Oil is stronger as are most commodity prices giving a boost to commodity currencies.
July 11, 2019
EUR/USD 1.1256 GBP/USD 1.2546 USD/CAD 1.3069 AUD/USD 0.6977 USD/JPY 108.25 USD/CNH 6.8719 USD/ILS 3.5532 USD/MXN 19.1282 USD/CHF 0.9873 USD/INR 68.4487
The dollar weakened overnight despite CPI data for June coming in higher than expected at 2.1%. Yesterday, the greenback sank following Fed Chairman Powell’s hints that they intend to cut rates soon. This in turn boosted wider risk appetite and pushed US stock indices higher with the S&P500 reaching the 3000 level for the first time in history. Powell is set to return for a second day of testimony before the Senate Banking Committee.GBP
The pound gained on overall dollar weakness for a second day. Mixed data on the health of the UK economy was released on Wednesday with Manufacturing Production numbers in May lower than expected, while Monthly GDP 3M/3M change was 0.3% versus 0.1% expected.EUR
The euro is up only slightly vs. the US dollar despite eurozone country-specific data coming in better than expected. Overnight brought the release of ECB minutes from the June meeting that showed a strong consensus to ease monetary policy further. Markets are now expecting a further cut in rates and possible increase in asset purchases at the July ECB meeting.CAD
The Canadian dollar is stronger again today on higher oil prices. A British naval ship escorted a British oil tanker by several Iranian gunships yesterday causing oil to tick higher. Also, a hurricane in the Gulf of Mexico will likely sweep through oil platforms on its way to the Louisiana coast by Monday. Oil production has been halted on half the capacity in the area in preparation.
The Bank of Canada left rates unchanged yesterday as expected.ASIA/PACIFIC
The Japanese yen gained on the US dollar as did most currencies. The yen strength was dampened by a general risk-off sentiment. The Bank of Japan meets on July 30 and market speculation is the central bank will extend its ultra-accommodative monetary policy beyond its current commitment of spring 2020 – limiting gains on the yen.
The Australian and New Zealand dollars gained on overall dollar weakness and higher commodity prices.
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