FX News

FX Update: Key Points this Week

Key Points:

US Equities have put in decent performances this week, overnight Treasury yields sank post the ECB decision rallying stocks and lifting “risk”
The Iron Ore slump continues, dropping to 100.00 per tonne this morning
UK inflation rose in June to 9.4% from May’s 9.1% making it the highest rate since 1982
The ECB surprised markets with a rise of 0.50% overnight from the 0.25% expected- this is the first time in 11 years
Canadian CPI rose to 8.1% in June from May’s 7.7%- the highest read since January 1983
US President Biden has Covid- he has reported mild symptoms
IMF cuts US GDP growth to 2.3% from 2.9%- 2023 also slashed from 1.7% to 1.0%
We expect the Fed interest rate to reach a peak of 3.5% in February 2023 before cuts start around the third quarter of next year
The Australian Dollar (AUD) is the strongest currency this month (July) while the Euro (EUR) is trading at the weakest by a long way.
The Bank of England will hike rates in their 5 August meeting from 1.25% to possibly 1.75% to curb rising inflation
Bank of Japan’s Kuroda has been on the wires saying raising interest rates won’t strengthen the Japanese Yen. As some central banks have done this it has actually weakened their currencies. A rate hike with no Yen strength would damage the Japanese economy.

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