Greenback surges as global shares fall
The US dollar was strongly higher on Friday as global shares fell on worries about the economic outlook after a series of weak global PMI numbers.
The US’s S&P 500 snapped a five-week winning streak while the tech-focused Nasdaq ended an eight-week gain with US markets also worried about a series of tough comments from Federal Reserve officials.
Last week, Fed chair Jerome Powell reiterated that he expected two more rate hikes this year.
The combination of factors saw the USD index jump from the six-week lows seen in the previous week.
Aussie hardest hit
The Australian dollar was the hardest hit, with the AUD/USD down 1.2%.
The Aussie was lower in most other markets with the AUD/EUR down 0.6% and the AUD/GBP falling 0.8%.
The NZD/USD fell 0.6% but outperformed versus the Australian dollar with the NZD/AUD up 0.6%.
The USD/SGD gained 0.5% as it reached one-month highs.
The USD/CNH climbed 0.3% as it marched above the key 7.20 level that has historically provided technical resistance.
Growth versus inflation to drive this week
Global markets face a test this week with Friday’s drop in the key purchasing manager indexes illustrating the narrow path central banks have to tread with inflation too high but global growth slowing.
Friday’s number confirmed the steep drop in German manufacturing – falling from 43.2 to 41.0 – but German services also saw a major decline from 57.2 to 54.1.
Both French services and manufacturing fell into decline while Europe-wide manufacturing now sits at 43.6. US manufacturing fell to 46.3. Any number below 50 is a sign of contraction.
Therefore, this week’s inflation numbers will be critical for central banks and future policy, with important readings due from Canada, Australia, Europe and the US this week.
Aussie plunges on Fed talk, PMIs
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 26 – 30 June
All times AEST
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*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.
