Daily Market Update

Overview

Last week’s ‘everything rally’ does appear to be well and truly over, as equities cooled yesterday and are set to remain fairly calm today as well. Gold and oil prices, however, ticked up a bit as geopolitical uncertainty continues to be at the foreground of the global landscape. Riskier assets and emerging market currencies are benefiting from the relief from the relentless US-driven rally of the first quarter, gaining on the morning – all told, quite the mixed bag today.

Further pushback from Chinese authorities on persistent Yuan weakness is once again at the forefront of the market’s collective consciousness, as China’s central bank boosted its support for the Yuan by the most since January. The central bank strengthened its daily reference rate by 0.1%, and state banks have been observed to be selling Dollar in favor of buying CNY, keeping both onshore and offshore Yuan afloat. Whether such action would have the intended effect of artificially boosting strength, rather than choking off flows, in an external environment less complacent than the one we currently see, however, remains up for debate. As it stands, FX market volatility has returned to relative lows after swinging up substantially during last week’s central bank flurry. As the world heads into various Easter holiday-related closures, we are likely to see choppy price action through the second half of this week, given thin trading flows to wrap up the first quarter of this year.

What to Watch Today…

USD ⇑

Swiss Franc is the lone loser against USD on the G10 board this morning, sliding to its weakest point against the Buck in more than eight months even as the broader Bloomberg Dollar Spot Index slid a tenth of a percent. Analysts are beginning to call for a more bearish longer-term run for CHF, after the Swiss National Bank set off the proverbial starting gun for policy easing from major central banks around the world. Earlier this year, CHF reached its strongest point against USD since Swiss policymakers decoupled it from the Euro all the way back in 2015, something the SNB isn’t too fond of, preferring a weaker currency.

CAD ⇑

The Canadian Dollar, seen a bit as simply treading water, is attempting to break out of its recent ranges and is posting a gain to the tune of a quarter of a percent this morning. A further rise in the price of WTI crude futures is undoubtedly giving CAD a bit of a boost. The Bank of Canada’s Carolyn Rogers also spoke this morning and highlighted the need to restore the country’s flailing productivity, potentially as a means for more economic growth without stoking further inflation.