Markets quiet, but anxious with uptick in Covid-19 cases
Financial markets were relatively calm overnight with little conviction, even as global Covid-19 cases increased. Asian equities edged lower after China and South Korea reported increases in virus cases. On the other hand, European equities edged higher despite more cases in Germany. US equities are poised to open steady, as Dr. Anthony Fauci will speak today at a Senate hearing and is expected to deliver a serious warning against reopening the economy too soon. Bond yields moved higher with the Treasury offering $32 billion 10-year notes today and the Fed purchasing for the first time corporate debt from investors as part of its emergency lending program. The dollar is lower on light volume.
“We must accept finite disappointment, but never lose infinite hope.”
May 12, 2020
EUR/USD 1.0872 GBP/USD 1.2344 USD/CAD 1.4005 AUD/USD 0.6514 USD/JPY 107.39 USD/CNH 7.0946 USD/ILS 3.5099 USD/MXN 23.9657 USD/CHF 0.9680 USD/INR 75.5100
USDThe dollar is steady to slightly lower, with the Dollar Index lingering around 100. There was little reaction from this morning’s release of US Core CPI, which posted a record -0.4% decline MoM. Headline CPI fell 0.8% in April from March, the biggest decline since December 2008. Yesterday’s Treasury sale of $42 billion of 3-Yr notes went at a record low yield of 23 basis points. Today, $32 billion of 10-Yr notes will be sold. The UST 10-Yr edged higher to 0.71%.GBPThe UK pound edged higher versus the dollar and steadied against the euro as UK Chancellor, Rishi Sunak, said the government program of paying the wages for 7.5 million citizens will remain through August. The pound recently had fallen amid confusion over plans to ease lockdown restrictions.EUR
The euro is higher even as Germany recorded its first increase of new Covid-19 cases in four days following a gradual reopening of its economy. European equities moved slightly higher. EU Trade Commissioner Hogan said he wishes to resume US-European trade talks in the hope of strengthening economic growth through expanded trade.CAD
Higher oil prices helped the Canadian dollar strengthen slightly versus the US dollar. The USD/CAD currency pair continues to hover around 1.40. The Canadian economic calendar is light today.ASIA/PACIFICThe Chinese yuan strengthened overnight even as the city of Wuhan, where the pandemic began, reported its first new cases in several weeks.
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