Tech stocks are under pressure after Snap Inc, owner of Snapchat, warned it would miss Q2 revenue forecasts. The US dollar is mixed, gaining most against GBP and AUD, losing most against the JPY and CHF. UST 10yr yields dropped 6 bps to 2.79%. ECB President Lagarde said the ECB is reaching a “turning point” in its monetary policy, she expects to leave negative interest rates by September. Oil and gold prices are unchanged. US PMI for May released this morning was weaker than expected.
May 24, 2022
EUR/USD 1.0736 GBP/USD 1.2516 USD/CAD 1.2802 AUD/USD 0.7086 USD/JPY 12678 USD/CNH 6.6645 USD/ILS 3.3460 USD/MXN 19.8030 USD/CHF 0.9603 USD/INR 77.58 USD/BRL 4.7788 USD/SGD 1.3720 USD/DKK 6.9310 USD/SEK 9.7886 USD/NOK 9.5822
The dollar index was little changed overnight, but USD was mixed versus specific currencies. USD gained 0.8% versus GBP and 0.5% versus AUD and NZD, but lost 0.5% versus the JPY. May’s PMI manufacturing and services PMIs were much lower than April’s figures and slightly less than expectations. Traders await FOMC minutes from the May 4 meeting to be released tomorrow.GBP
The UK pound was the worst performing major currency overnight. GBP/USD dropped by 0.8% following news that UK Services PMI for May fell significantly below expectations, triggering fears of a recession for the UK. GBP’s recent rally from the May 13 $1.2156 low to yesterday’s $1.2601 high was stopped in its tracks.EUR
The euro traded in the fairly wide range overnight, but currently trades little changed from yesterday’s close. Selling was seen following release of Eurozone PMIs for May that were lower than April’s figures and less than expected. Euro buying came back after ECB President Lagarde made hawkish statements: “for the moment, we are not seeing a recession in the euro area,” adding that the ECB is likely to exit negative interest rates by end of Q3. After dropping to $1.0350 on May 13, the euro has rallied nearly 3%.CAD
The Canadian dollar weakened slightly versus USD, falling off its best levels since early May. After peaking at 1.3077 on May 12, USD/CAD fell to this morning’s low at 1.2765. Oil prices moved little. Traders await Thursday’s release of Retail Sales in Canada for March.ASIA/PACIFIC
The Japanese yen was the best performing G-10 currency, led by unexpectedly buoyant news on Japan’s department store sales.
The Chinese renminbi was little changed overnight, with no economic news to impact markets. However, the recent strengthening trend of CNY versus USD remains intact, despite a roll back of optimism related to President Biden’s comments about lowering tariffs on China. Biden’s comments on supporting Taiwan in the event of a war with China had little impact on the currency.
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