Earlier in the trading session, the Bloomberg Dollar Index hit levels not seen since May 2020. China’s COVID Zero policy intensified as new lockdowns spread to Beijing. Trading sentiment shifted towards risk-off as investor concerns increased because China’s policy could impact global supply chains and cause inflation to increase across the globe. The People’s Bank of China announced it will reduce its foreign currency reserve requirements causing the US dollar to retreat from highs seen earlier in the session.
Economic data this week:
Wednesday: BOJ Policy Balance Rate Decision
Thursday: US Initial Jobless Claims, US GDP
April 25, 2022
EUR/USD 1.0727 GBP/USD 1.2729 USD/CAD 1.2762 AUD/USD 0.7150 USD/JPY 127.88 USD/CNH 6.5914 USD/ILS 3.2889 USD/MXN 20.3423 USD/CHF 0.9556 USD/INR 76.6913 USD/BRL 4.8612 USD/SGD 1.3740 USD/DKK 6.9344 USD/SEK 9.6571 USD/NOK 9.0914
USDEarlier in the trading session, the Bloomberg Dollar Spot Index traded 0.5% higher hitting levels not seen since May 2020. Investors moved towards risk-off trading as COVID lockdowns in China caused concern for further inflation globally as China’s policy could have major repercussions for supply chains. The greenback has since retreated from highs following the PBOC’s announcement to cut its foreign exchange reserve requirement.GBPGBP/USD is trading more than 100 pips lower on broad market risk-off sentiment. Data out of the UK showing soft business survey data also put downward pressure on the currency.EUREUR/USD is trading below 1.08 at the lowest levels since March 2020 as the US dollar strengthens across the board. The currency pair could likely approach a low from 2020 of 1.0636.CADUSD/CAD up 0.4% as WTI oil dropped below $100 for the first time in over a week. WTI crude futures dropped 5% earlier in the trading session.ASIA/PACIFIC
The Australian dollar fell to a two-month low following news out of China regarding the nation’s attempt to contain a COVID-19 outbreak. This news along with investors' concern of an aggressive Fed hurting world growth has resulted in risk-off trading.
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
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