Markets mixed after Fed Chair Powell's calming comments, dollar lower

Financial markets are showing mixed performances overnight as investors assess the Fed’s hawkish tilt last week and then Fed Chair Powell’s calming message yesterday. Asian stocks were generally up and European stocks lower. Global bonds yields were soft, but US Treasuries edged higher to 1.49%. The dollar index is slightly lower, commodity currencies – MXN, NOK, NZD and RUB – are outperformers. Oil rose above $74 a barrel and gold rose to $1,790 an oz. Traders await tomorrow’s Bank of England meeting.

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FX Rates
June 23, 2021

Rates are not real time. Rates are today's indicative mid-market rates as of time of publishing, which may vary. Please contact SVB for a current quote.

EUR/USD 1.1962
GBP/USD 1.3997
USD/CAD 1.2269
AUD/USD 0.7597
USD/JPY 110.72
USD/CNH 6.4716
USD/ILS 3.2522
USD/MXN 20.2503
USD/CHF 0.9162
USD/INR 74.28
USD/BRL 4.9565
USD/SGD 1.3433
USD/DKK 6.2166
USD/SEK 8.4657
USD/NOK 8.4906
USD
The dollar is generally lower with commodity currencies gaining the most against the dollar as oil and gold climb. Trading is light as markets continue to assess the Fed’s comments/intentions. This morning’s US PMI data for June was mixed – better-than-expected Manufacturing PMI and worse Services PMI. New Home Sales for May was both weaker than expected and lower than April’s figure.
GBP
Tomorrow, the Bank of England meets. Expectations are that it will keep its monetary policy and asset purchase program unchanged amid the narrative that any rise in inflation will be transitory. US dollar-related issues are currently driving FX markets more so than any pandemic or Brexit-related issues.
EUR
The euro is up slightly, in-line with a generally weaker US dollar. Earlier this morning, better-than-expected Purchasing Manager’s Index (PMI) data for Germany and the Eurozone in aggregate was reported for June.
CAD
The Canadian dollar is up overnight as oil prices rose above $73 a barrel. This morning’s release of Retail Sales for April showed a significant decline of 5.7% MoM, much worse than expectations and March’s figure. However, the big upward revision in March’s figure led to little movement in the CAD.
ASIA/PACIFIC
The Japanese yen fell to its weakest rate in more than a year, primarily in reaction to the Fed’s hawkish tilt last week. Expectations of higher US yields and steady Japanese yields is fueling the stronger USD versus the yen. Traders await tomorrow’s release of Japan’s CPI and jobless rate.

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Source: Bloomberg

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WRITTEN BY

Scott Petruska, CFA

Markets mixed after Fed Chair Powell's calming comments, dollar lower