Stocks rallied, bond yields rose and the US dollar is broadly weaker on news that President Biden may reconsider tariffs on China. Investors see the potential de-escalation of the China-US trade war as a reason to be optimistic towards risk assets. The euro is higher following increasing hawkish comments from ECB President Lagarde. The Australian dollar gained on news of a new majority government. Traders are focused on a slew of key economic data this week here and abroad, and on an expected stream of comments over the next few days from global financial elite out of Davos, Switzerland, where the World Economic Forum is taking place for the first time since the pandemic.
Canada consumer confidence, Japan PMIs
US new home sales, Eurozone PMIs, UK PMIs
FOMC minutes, ECB publishes Financial Stability Review
US GDP, initial jobless claims, Canada retail sales, Japan CPI
US core PCE, personal income and spending, wholesale inventories, University of Michigan consumer sentiment
May 23, 2022
EUR/USD 1.0665 GBP/USD 1.2585 USD/CAD 1.2786 AUD/USD 0.7108 USD/JPY 127.57 USD/CNH 6.6611 USD/ILS 3.3372 USD/MXN 19.7977 USD/CHF 0.9649 USD/INR 77.51 USD/BRL 4.7978 USD/SGD 1.3735 USD/DKK 6.9779 USD/SEK 9.8435 USD/NOK 9.6275
The dollar is broadly weaker in a risk-on market triggered by news that President Biden my reconsider tariffs on China imposed by the Trump administration. Commodity currencies outperformed most others, the euro and UK pound are up nearly 1% since Friday’s close. Since peaking on May 13, the US index (DXY) has dropped about 2.75%.GBP
The UK pound is higher by nearly 1%, in line with broad dollar weakness. Since bottoming at $1.2156 on May 13th, GBP is up about 3.5%. Prices of UK houses rose to a fresh record high for the fourth straight month, though analysts see signs of the market nearing a top.EUR
The euro is up about 0.80% from Friday’s close, and in line with broad dollar weakness. Since bottoming at $1.0350 on May 13th, the euro is up over 3%. ECB President surprised the markets by announcing in advance interest rate hikes in July and September, indicating that negative interest rates will be gone by the end of Q3 and monetary policy will be tightened until a “neutral” rate is reached.CAD
The Canadian dollar rose against the USD, but underperformed most other G-10 currencies even with a slightly higher price in oil. Since peaking at 1.3077 on May 12th, the USDCAD has dropped about 2.25%. Traders await Thursday’s release of Retail Sales for March.ASIA/PACIFIC
The Japanese yen is basically flat since Friday, the poorest G-10 performance. The USDJPY has been consolidating since peaking at 131.25 on May 9th.Test sectionThe way to go about this is to move quickly.
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