Global overview
The U.S. dollar was steady to stronger against its chief peers ahead of remarks today from some of the world’s most influential central bankers. The buck’s steadiness came against the euro while its strength was evident versus the yen which plumbed another seven-year bottom. Sterling fell with Canada’s dollar retreating from nine-month peaks. The ECB’s summer conference in Sintra, Portugal, continues to dominate the spotlight. The euro rose this week after ECB officials emphasized a resolve to keep raising rates to tackle inflation. Sharing the stage today with Christine Lagarde, the president of the ECB, will be the heads of the U.S., UK, and Japanese central banks. For the yen to find at least a temporary floor, Japan’s new central bank governor, Kazuo Ueda, would have to signal a willingness to abandon low-rate policies sooner rather than later. The greenback has been supported this week by stronger than expected data that alleviated worries about the world’s largest economy slipping into recession.
Euro loses steam
The euro pared some of its weekly gains ahead of remarks today from a slew of central bankers. The heads of central banks in the U.S., Europe and Japan will share the stage in a panel discussion at the ECB’s conference in Sintra, Portugal. The euro tends to outperform when markets focus on the ECB’s outlook of rising borrowing rates to tame inflation. Still, the bloc’s fragile economy tends to check the euro’s advance as higher rate policy could mean a longer period of subpar growth.
Sterling falls to 2-week lows
The UK pound fell to two-week lows below 1.27 as sentiment turned cautious ahead of remarks today from Bank of England Gov. Andrew Bailey. Sterling has been the best performing major currency this year, with GBP/USD up about 4.5%, given the steady rise in British borrowing rates to 5%, the highest in 15 years. While stronger, the pound remains vulnerable as markets assign a precarious outlook for UK growth amid ongoing rate rises to quash inflation.
Loonie retreats from 9-month highs
The Canadian dollar fell to one-week lows above 1.32 as the greenback firmed and data this week showed a welcome slowdown in Canadian consumer prices. Consumer inflation moderated by a full percentage point to an annual rate of 3.4% in May, the lowest level since June 2021. Lower inflation showed the Bank of Canada on track to attain its forecast of a level of around 3% by mid-2023. Cooler inflation also makes for a closer call whether Ottawa will raise rates from 22-year highs of 4.75% as soon as next month, a less hawkish outlook that helped USD/CAD rebound from September 2022 lows near 1.3115.
Dollar buoyed by solid data
Table: rolling 7-day currency trends and trading ranges
Key global risk events
Calendar: Jun 26-30
Have a question? [email protected]
*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
