The normally safe-haven US dollar is weaker to start the weak despite risk-off sentiment
Rising coronavirus cases around the world tilted investment sentiment away from risk assets. The UK shows a fifth day of reduced covid case numbers helping to lift the pound while the Aussie dollar struggles to keep pace on fears over low vaccination rates. Equity markets in China tumble weakening the offshore yuan. Investors see a heavy hand in China as state regulators exert more control on industry.
Economic Data for this Week:
Tuesday: Durable Goods Orders for June, S&P CoreLogic house price changes for May, Conference Board Consumer Confidence for July
Wednesday: Retail & Wholesale Inventories for June, FOMC Rate Decision and press conference
Thursday: Weekly Initial Jobless Claims, GDP for Q2Pending Home Sales for June
Friday: PCE Deflator for June; Univ. of Michigan Consumer Confidence for July
July 26, 2021
EUR/USD 1.1786 GBP/USD 1.3793 USD/CAD 1.2583 AUD/USD 0.7362 USD/JPY 110.2900 USD/CNH 6.4895 USD/ILS 3.2651 USD/MXN 20.0892 USD/CHF 0.9190 USD/INR 74.4200 USD/BRL 5.2151 USD/SGD 1.3601 USD/DKK 6.3101 USD/SEK 8.6552 USD/NOK 8.8550
The dollar begins the week by giving up all last week’s gains in volatile trading amid record low yield on the 10 year and as virus fears boost treasury buying ahead of FOMC announcement this week.
The US Federal Reserves’ Federal Open Market Committee (FOMC) begins a two-day meeting tomorrow which concludes with a statement and Q&A with the press. The Feds' views on inflation are now firmly in the political arena as Republicans point to higher inflation as a reason to delay or cancel spending on infrastructure.GBP
The British pound is stronger on overall US dollar weakness and reports of a fifth consecutive day of decreasing numbers of covid cases.EUR
The euro gained vs. the US dollar despite the German IFO Business Climate index for July coming in at 100.8 vs. the 102.2 expected. Protests in some European countries against covid restrictions over the weekend highlighted the split in public opinion and the lack of consensus amongst politicians.CAD
The Canadian dollar is slightly stronger despite lower oil prices. The C-dollar gained on overall US dollar weakness and views that the Canadian’s higher levels of vaccination rates will benefit the economy in the long run.ASIA/PACIFIC
The safe haven Japanese yen is stronger this morning on increasing numbers of covid cases in numerous countries around the world.
The Chinese renminbi lost ground to the US dollar this morning as equity markets sink in China. The Chinese government set new rules around education tech companies essentially making them non-profits leading investors to speculate which sector will be tampered with next and sending investment capital out of the country.
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
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