While strategic investors and economists debate the possibility of a recession, the FX markets, like equities, lurch from risk-on to risk off. Both Canada and the UK print inflation data sure to support additional rate hikes. Oil slides 6% on recession fears.
“Do not take life too seriously. You will never get out of it alive.”
June 22, 2022
EUR/USD 1.0548 GBP/USD 1.2258 USD/CAD 1.2957 AUD/USD 0.6915 USD/JPY 135.99 USD/CNH 6.7128 USD/ILS 3.4539 USD/MXN 20.1128 USD/CHF 0.9627 USD/INR 78.38 USD/BRL 5.1685 USD/SGD 1.3885 USD/DKK 7.0527 USD/SEK 10.1254 USD/NOK 9.9407
Little economic news this morning so FX markets are being driven by overall risk sentiment. Overnight, the dollar surged vs. most currencies as Asian central banks are generally seen as being behind the Fed when raising interest rates. Dollar gains were quickly given back in morning trading in the US.GBP
The pound is flat after UK CPI printed at 9.1% accelerating from 0.1% the month prior. Inflation is currently expected to peak near 10% in October.
According to the resolution foundation, Brexit reduced the competitiveness of the British economy, with workers expected to be £500 worse off by 2030. Despite this, UK stocks have started to outperform US and European equities thanks to their large exposure to commodity firms and banks.EUR
The euro is slightly stronger in early trading. The Czech central bank is seen hiking between 0.75%-1.5% in what might be the last of their big moves to contain inflation.
Italy faces a political crisis as significant politicians threaten to leave the Five Star movement, over the party’s refusal to back military support for Ukraine.CAD
The Canadian dollar is weaker as oil price tumbles. Annual inflation reached 7.7% in May in Canada which is the highest since January 1983. The price of a barrel of oil fell 6% in morning trading on fears of a recession. Oil is trading below its 100-day moving average.ASIA/PACIFIC
The yen hit a 24-year low before recovering following news from the BoJ meeting minutes that officials discussed forex intervention at their April meeting.
The renminbi is weaker despite China’s finance minister stating that Beijing is considering further pro-growth policies to aid an economy struggling to shake off the latest omicron wave.
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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