Daily Market Update

Dollar Losses As Stocks Gain Steam

June 21, 2022

The U.S. dollar is a touch weaker this morning against most of its majors, especially Scandinavian currencies. 

Overview

The Bloomberg Dollar Spot Index is down 0.3%.   Global equities are solidly in the green, and U.S. futures are pointed towards a higher open after being closed yesterday in celebration of Juneteenth.

The relief in markets seems fragile and possibly short-lived.  President Joe Biden said that a recession isn’t “inevitable.”   A survey by Bloomberg News shows that most economists expect consumer prices to start to fall to 6.5% by the end of this year and 3.5% by the middle of 2023.  In the meantime, we expect heightened volatility across all markets as investors continue to change their expectations for the next Fed move.

This morning’s economic data has not swayed the mood so far.  The May Chicago Fed national index was down to 0.01 from an upwardly revised 0.47 in April.  A separate report showed the Philadelphia Fed Non-Manufacturing Index fell to 4.6 from 23.4 in the month prior. Existing Home Sales are due out at 10 a.m.  There are also a few Fed speakers spread out throughout the day.

 

What to Watch Today…

  • Existing Home Sales at 10 a.m.

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CAD

The Canadian dollar gained against the U.S. dollar overnight but has given up some of its gains in early trading.  The loonie has found a more steady footing after a report showed Canadian retail sales in April slightly beat expectations.  Sales rose 0.9% in April, beating estimates of 0.8%.  Sales excluding automobiles rose an impressive 1.3%, double the estimated 0.6%.

The loonie found added support as the price of WTI crude rose 1.5 percent.

 

EUR

The Euro popped as much as 0.7% against the greenback before giving back half of those gains.  The common currency’s modest revival is likely caused by tightening yield spreads between Italy and German bonds.

The European Central Bank’s next scheduled meeting is scheduled for July 21st, and the ECB is widely expected to hike rates.  Governing Council member Olli Rehn said that central bank has “good reason” to begin its rate hiking cycle at next month’s meeting.  Rehn said that next month’s hike will be 25 basis points and gradual increases will follow.

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