Risk-off sentiment rises as Chinese industrial production and retail sales data disappoints. Sterling continues to decline as the UK prepares to hear the Government's changes to the Northern Ireland Protocol.
May 16, 2022
GBP/USD 1.2223 GBP/EUR 1.1738 EUR/USD 1.0412 USD/CAD 1.2944 EUR/CHF 1.0471 EUR/SEK 10.4934 EUR/NOK 10.2058 EUR/DKK 7.4409 USD/ILS 3.4104 AUD/USD 0.6899 NZD/USD 0.62555 USD/SGD 1.3947 USD/JPY 129.37 USD/CNH 6.8166 USD/INR 77.4375 EUR/ILS 3.5504 GBP/ILS 4.1681 USD/ZAR 16.2829
Sterling continued its decline last week, losing 1.23% against the Dollar to trade at a low of 1.2166 amid Brexit concerns. The pair briefly recovered during the Asian session but has since dropped 0.3% as investors prepare to hear the governments changes to the Northern Ireland Protocol tomorrow.
New reports show that 75% of British companies have now increased their number of British suppliers, in a “reshoring” push to try and address post Covid and post Brexit supply chain issues.EUR
New surveys show that ECB rate hike expectations are continuing to creep higher, with economists now predicting three 25bps hikes over the course of the year. Comments from ECB member Villeroy this morning suggested that a consensus on normalising monetary policy is emerging within the central bank.
EURUSD dropped to near 5-year lows on Friday, briefly trading below 1.0400. The Stoxx 600 declined 0.5% as sentiment fell on poor Chinese data.USD
Rising inflation and supply-chain issues have started to have an impact on the US junk bond market, with the broader high-yield bond market now at its worst level in 17months.
The DXY continues to climb, gaining 0.7% last week and US futures retreat as concerns over the global outlook dampen risk sentiment. Futures on the S&P and Nasdaq lost 0.8% and 1% respectively. Brent crude fell 1.4%ASIA/PACIFIC
The Peoples Bank of China refrained from cutting interest rates despite the evidence of a slowdown. China’s economic activity plummeted in April, amid new lockdowns across the country. Retail sales slumped 11.1% YoY, far worse than expectations, whilst Industrial production dropped 2.9%, despite being forecasted to rise.
The Yuan weakened and JPY and USD gained on the release, with treasuries climbing and stocks down. The Tech heavy Hang Seng lost 3%.ILSUSDILS trades 0.2% higher this morning, printing around the 3.4100 level at time of writing.
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