The U.S. dollar experienced its largest decline of the month overnight.
Overview
The Bloomberg Spot Dollar Index sank half a percent as global equities ticked higher. Other than an improvement in market sentiment, there was little fundamental reason for the dollar to slump. Rather, many analysts point to profit-taking at recent dollar highs. Therefore, today’s pullback may be seen as a blip rather than the beginning of sustained dollar selling. There are three Fed speakers on today’s docket, although all three are non-voting FOMC members. San Francisco Fed President Mary Daly kicks things off at 11:25 a.m., followed closely by Chicago Fed President Charles Evans at 11:30 and Atlanta Fed President Raphael Bostic at 1 p.m. At 10 a.m., existing-home sales will cross the wire. However, currency markets are likely to look to greater, wider themes during today’s session. The Fed will release its Beige Book at 2 p.m.
What to Watch Today…
- Fed Beige Book at 2 p.m.
Back to Back TOP Wins | #1 G10 Forecaster for Q1 2022
Bloomberg ranks Monex USA (formerly Tempus) as the top G10 Forecaster, NZD, CHF, AUD, MXN, and GBP! Learn More
EUR
Like the rest of its G10 counterparts, the Euro experienced a pop against the greenback overnight. The common currency found support after European Central Bank governing council member Martin Kazaks said the central bank could raise rates as soon as July amid “significant” inflation risks.
Much of the Euro’s weakness this year can be attributed to the expected policy differential between the U.S. Fed and the ECB so a spike in the Euro following the hawkish commentary is common sense. Markets are pricing in a 25 basis point hike by the ECB in July but markets are also pricing in an additional 1% of rate hikes in the U.S. by the end of July so the differential is still quite wide.
JPY
The Japanese yen rose for the first time in two weeks, breaking a historic run of losses. The yen rose 1.0% overnight but remains down over 4.0% this month and is the worst-performing G10 currency this calendar year. While there has yet to be proof of physical intervention in currency markets, policymakers continue to chirp. Japan’s deputy chief cabinet secretary Yoshihiko Isozaki said that the government will coordinate with other currency authorities as it watches the weak yen with vigilance.
Ready to spin the currency market moves in your favor?
DISCOVER HOW WE CAN HELP YOU SEND or RECEIVE PAYMENTS
