December FOMC minutes released yesterday afternoon were deemed hawkish causing Treasury yields to increase and the dollar to strengthen. Overnight, the dollar had further gains but began to lose steam into the start of US trading. The euro weakens on somewhat lower German inflation data and the renminbi sinks on news of another Chinese property developer defaulting.
January 6, 2022
EUR/USD 1.1310 GBP/USD 1.3537 USD/CAD 1.2766 AUD/USD 0.7160 USD/JPY 115.78 USD/CNH 6.3884 USD/ILS 3.1106 USD/MXN 20.5287 USD/CHF 0.9185 USD/INR 74.4975 USD/BRL 5.7065 USD/SGD 1.3606 USD/DKK 6.5771 USD/SEK 9.1399 USD/NOK 8.8900
The dollar is about where it started the week having rebounded off losses when the FOMC released minutes. This morning’s weekly jobless claims (+207K) were higher than the 195K expected but remain near historic lows. Financial markets gave little attention to the jobless claims as focus now turns to the final reading of Durable Goods for November due later this morning and, more importantly, tomorrow's Non-Farm Payrolls for December.GBP
The pound is weaker this morning on overall dollar strength. A Bank of England survey showed British businesses plan to raise prices 5% in 2022 giving a temporary lift to the pound.EUR
The euro is down since the FOMC minutes were released yesterday afternoon. Overnight, German inflation for December came in at 5.7% which was a bit higher than the 5.6% expected but down from 6% in November. The European Central Bank has indicated a view that inflation remains transitory and that November was likely a high point. The euro sold off on the inflation data with the markets seeing the ECB holding rates low for longer.CAD
The Canadian dollar is weakened after the FOMC minutes yesterday and continued to slide until oil prices began trading higher. Canadian trade balance data confirmed the surplus continued in November reaching the highest monthly total since 2008.
The price of oil is higher again today with the rally since December 20 now at +16%.ASIA/PACIFIC
The Chinese renminbi weakened partially due to news a bellwether property developer, Shimano, defaulted on a $101M debt payment. Real estate and property development make up roughly 25% of the Chinese economy with Shimano being the third company to run into credit trouble signaling larger issues in the sector.
The Japanese yen traded above 1.16 overnight but then strengthened again. Traders see the recent high of 1.1635 as a key resistance level.
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