Commodities fall; Buck rises over MXN, AUD, others

The U.S. Dollar is trading in mostly tight ranges, primarily a gainer against petro-currencies and commodity-based tender.

Overview

Indeed, the Canadian Dollar, Mexican Peso, and Norwegian Krone are losing ground as oil prices are losing steam based on turmoil over supplies and a lack of clarity over the EU’s full support of a ban on Russian fossil fuels. Meanwhile, the Antipodean currencies in AUD and NZD are down by over half a percent with pessimism over China’s demand as well as growth.

Domestically, we will be concerned with tomorrow’s inflation print in the form of Consumer Price Index figures for April. Some hawkish comments, particularly from Fed Bank of Atlanta President Raphael Bostic, indicated that officials see the current tightening path as necessary, and he noted that 75-basis-points hikes may not be completely off the table.

Even more than the toll of the war thus far, equities continue to struggle and erase gains from 2021 out of fear that the Fed may be tightening too aggressively. Volatility remains high for the buck and guidance is hard to foresee ahead into the future.

What to Watch Today…

No major economic events are scheduled for today

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EUR

The Euro is holding steady as it tries to stay above its weakest point in a few years, struggling to find the momentum to appreciate. Although French elections already passed and there is growing consensus among EU leaders on how to aid Ukraine, risks remain elevated for the shared currency and its economic area.

Attempting to separate from energy interdependence with Russia requires commitment and the EU is struggling to get Hungary to agree not to veto the proposal to ban all energy imports by end of the year. The economic impact is what worries plenty and it will remain a point of contention from many on the Eastern front.

NOK

Norwegian Krone fell to its weakest point since June 2020 following a combination of economic data pointing at higher prices than expected, and as mentioned above, the complicated energy crisis. Norway’s inflation grew to a 13-year, which means more tightening and perhaps downward pressure on the economy.

Many countries are now coping with the prospect of stagflation, higher prices with lower economic growth. As the industrialized base of the globe struggles, it is possible other nations’ struggles last even longer thus the risk-aversion gripping global markets.

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