The U.S. Dollar is soaring this morning as global equities continue to dump value.
Overview
China’s zero covid policy is failing and investors now have to contend with the possibility much of the world’s largest manufacturing economy will be shut down which would exert strong upward pressure on inflation pressures. As a result, global equities are a sea of red and the S&P 500 will start the day at the lowest level since March.The Euro is at its lowest level since the spring of 2020 even after Emmanuel Macron secured his second presidential term, a development that was projected to be a relief to investors.Today’s economic calendar is light with just the Dallas Fed manufacturing index out at 10:30 a.m. However, there is a slew of data out tomorrow, including Durable Goods orders, consumer confidence, and new home sales. There are no Fed speakers on this week’s docket ahead of next week’s interest rate decision. Our call is still for a 50-basis point hike.
What to Watch Today…
- Dallas Fed Manufacturing Index at 10:30 a.m.
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CAD
The Canadian dollar is down for the third straight day. Oil dropped below $100 for the first time in a week, allowing the loonie to slip. Canadian wholesale sales fell 0.3% month over month in March, according to Statistics Canada. Bank of Canada Governor Tiff Macklem will speak before a Parliamentary committee later this morning.
GBP
The Sterling continues to fall against the U.S. dollar, reaching its weakest level since July 2020. The recent hit comes on the heels of a report that showed a fall in U.K. manufacturing. In addition, manufacturers hiked prices at the fastest pace in more than forty years as energy and material costs soared.
Analysts were quick to point out that the weak data highlights the razor’s edge the Bank of England must contend with. The BoE needs to raise interest rates to stem inflation but at the risk of causing the economy to slip into a recession. This story is similar to several G10 central banks.
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