Daily Market Update

Holiday-weekend style trading hurting the buck

May 27, 2022

The U.S. Dollar lost ground this morning with the return of “Buy-the-dip” investors ahead of the holiday weekend observing Memorial Day. 

Overview

Technology stocks went up across the board and during the Chinese trading session, two tech powerhouses reported better-than-expected sales. This all comes after a week in which the risk-off sentiment that characterized most of May that put pressure on the greenback’s peers has mostly faded. While understanding that the war and monetary tightening have made for some worsening outlooks, investors keep faith that priced-in borrowing costs will not lead to recessionary regression to the economy.Global equity funds climbed this week, seeing their largest flow of investment in ten weeks as news that China is focused on stimulating the economy and resilience in consumption hit as we approach June and what could be a very volatile Summer. In Russia, the war’s toll may have a major impact today as the country tries to avoid its first foreign default in one hundred years.Personal Income and Spending for April released earlier showed that wages are still not even matching estimates coming in 0.4% vs 0.5% forecast, but Spending did expand by 0.9% vs. 0.8%. We shall see if Consumer Sentiment has improved as the Michigan Wolverines survey comes out at 10 AM. It could be quiet as the reaction fades for the weekend.

 

What to Watch Today…

  • Monex USA is closed for the holiday on Monday, May 30th; Monex USA Online is always open
  • University of Michigan Consumer Sentiment Survey 10 AM

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EUR

Recent optimism over the Euro-zone’s ability to withstand the tough times of conflict and the central bank’s willingness to tighten monetary policy have uplifted the shared currency. Following its dip to a 5-year low in mid-May, the Euro has climbed by 3.5% over the greenback to what seems like an inevitable correction. While nations coordinate to find a solution and contingency plan to the loss of Russian energy imports, expect growth to also be a focal point in the Summer, with expected tourism and activity to increase after pandemic woes.

 

GBP

Sterling picked up some steam as the buck seems on a weakening trend at the moment based on risk appetite across markets. Although the Bank of England is set on a tightening path, the government is expected to give some help directly to families in order to directly impact the economy as people have struggled to recover from the nadir of 2020. Additionally, the U.K. may not be trading as smoothly as desirable with the EU, but Prime Minister Boris Johnson expressed commitment to aid Ukraine militarily and criticized Russia’s Vladimir Putin as a “crocodile” with no point in negotiating.  

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