A strong start to the US corporate earnings season is supporting stocks, as investors’ concerns about a potential recession are allayed. Asian and European stocks are also in the green. Bond yields edged higher after yesterday’s big fall – the UST 10Yr currently trades at 2.88%. The euro was the biggest gainer against the USD overnight, the AUD and NZD the worst performers. This morning’s US jobless claims came in slightly above expectations. Preliminary PMI’s for April will be released tomorrow. Oil and gold are little changed.
April 21, 2022
EUR/USD 1.0885 GBP/USD 1.3065 USD/CAD 1.2483 AUD/USD 0.7426 USD/JPY 128.32 USD/CNH 6.4693 USD/ILS 3.2294 USD/MXN 20.1463 USD/CHF 0.9493 USD/INR 76.1588 USD/BRL 4.6220 USD/SGD 1.3610 USD/DKK 6.8393 USD/SEK 9.4297 USD/NOK 8.7986
A risk-on mood based on upbeat earnings reports is having a positive impact on global stocks, and pushing up bond yields. The dollar has swung within a relatively wide trading range, but currently sits mixed overnight against its G-10 peers – the euro the strongest, the antipodean currencies (AUD and NZD) the weakest. The dollar versus the EM currencies was also mixed – the RUB and East European currencies the strongest, Asian currencies the weakest. Initial Jobless Claims for last week of 184K was close to 180K expected, and continues a declining trend in place since January 2021. Traders look forward to tomorrow’s US preliminary PMI data for April.GBP
The UK pound is barely changed overnight, continuing to trade within the $1.2975 - 1.3150 range in place for the month of April. Market analysts are increasingly concerned that the UK will go into recession as inflation hits 9%. UK Retail Sales for March and preliminary PMI data for April are released tomorrow, and expectations are for weak figures.EUR
The euro is the top performing G-10 currency overnight, fueled by reports that traders are betting on three 25 bp rate hikes from the ECB this year. Rising inflation is expected to pressure the central bank to raise its benchmark rate above zero (currently at -0.50%) for the first time in 10 years. Hawkish comments from a ECB Governing Council member spurred the change in market sentiment.CAD
The Canadian dollar is up slightly overnight against the USD, reaching its best levels in two weeks. A slight improvement in US-CAD interest rate differentials in favor of Canada fueled CAD’s rally. Traders await tomorrow’s release of Industrial Production (Mar) and Retail Sales (Feb) for Canada – expectations are for weak figures.ASIA/PACIFIC
The yen weakened a bit overnight, the USD/JPY consolidating after peaking yesterday at 129.40, then selling off to a low of 127.46. Japan will publish inflation and PMI data later today.
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