The US dollar and interest rates both eased back following the release of March CPI data. The headline inflation data may not have been as high as some had expected causing Treasury rates to slip and FX traders to take profits on long-dollar bets. The price of oil rebounded on news Shanghai will ease some COVID restrictions. The Israeli central bank surprised markets with a larger than expected rate increase to 0.35% causing the shekel to gain.
“I never dreamed about success – I worked for it.”
April 12, 2022
EUR/USD 1.0873 GBP/USD 1.3042 USD/CAD 1.2614 AUD/USD 0.7469 USD/JPY 125.09 USD/CNH 6.3680 USD/ILS 3.2093 USD/MXN 19.8288 USD/CHF 0.9296 USD/INR 76.1837 USD/BRL 4.6382 USD/SGD 1.3625 USD/DKK 6.8378 USD/SEK 9.4834 USD/NOK 8.7531
US CPI for March came in at 8.5% which was slightly ahead of the 8.4% forecast, but below some whisper numbers. The Core CPI figure was 6.5% which was slightly less than the forecast of 6.6%. Overnight, the 10-year treasury yield rose above 2.8%, the highest level since December 2018, as all signs continue to point to expectations of the fastest monetary tightening since the early nineties.GBP
The pound gained on the US dollar following the CPI reading, but remains near 1.30-1.31 lows. UK living standards fell at the quickest pace in over eight years, as wage growth trailed behind inflation in February. Despite unemployment falling to the lowest level since the end of 2019, the soaring cost of living is overshadowing the UK's strong labor market.EUR
EUR/USD shot higher on overall dollar weakness. European natural gas prices rallied, following a week of declines, as Russian supplies through Ukraine are expected to drop. The euro continues to trade near 1-year lows relative to the US dollar on concerns the eurozone economy will be more severely impacted by the Russian/Ukraine war.CAD
The Canadian dollar gained versus the greenback after the CPI print. Strength in the loonie was also supported by a rebound in oil. The price of oil jumped 4% on news Shanghai eased some lockdown restrictions and rumors that OPEC has told the European Union it will not be possible to replace potential Russian supply loss.ASIA/PACIFIC
The Australian dollar gained on the greenback after four days of losses as the price of oil rose and US Core CPI was not as high as expected.
The yen rebounded against the dollar after today’s US CPI data. Japanese Finance Minister Suzuki has heightened warnings over the depreciation of the yen, confirming the government will be monitoring the situation closely.
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.