Daily Market Pulse

Dollar edges amid strong labor market data

USD

The U.S. dollar index rose on Monday after closing 0.30% higher on Friday, as robust U.S. jobs data bolstered the case for more aggressive Federal Reserve rate hikes to contain decades-high inflation. On the data front, the American economy added 431,000 jobs in March, falling short of predictions, although the unemployment rate fell to a new 2-year low of 3.6%, and pay growth quickened, allowing for a 50 basis point rate increase in May. In markets, U.S. stock futures fell in Asian hours on Monday after the S&P 500 and Nasdaq both gained for the third week in a row. Treasuries fell amid expectations of a significant increase in Federal Reserve interest rates to combat inflation in their upcoming meetings.  West Texas Intermediate (WTI) crude oil changes hands around $100 per barrel as a result of China's covid epidemic and Biden's call for strategic reserves. Coming up, investors will see a deluge of economic data releases while remaining primarily focused on geopolitical headlines.

  • Monday 04/04/2022 - Factory Orders (Feb) 
  • Tuesday 04/05/2022 - Trade Balance (Feb)  ¦ Markit composite PMI (Mar)  ¦  Service PMI (Mar)  ¦ ISM Non-Manufacturing PMI (Mar) 
  • Wednesday  04/06/2022 - FOMC meeting minutes 

EUR

The Euro closed 0.22% lower on Friday before consolidating losses during the early hours of the trading session. The common currency fell from a one-month high set last week, as optimism over the receding war in Ukraine faded and increasing inflation threatened the bloc's economic prospects. According to preliminary estimates, the headline HICP rate in the Eurozone, the inflation gauge in Europe, rose again in March, reaching a new all-time high of 7.5%, up from 5.9% in February and well above market expectations of 6.6%. Investors have bet that the European Central Bank's (ECB) era of negative interest rates will end sooner than previously anticipated, and ECB President Christine Lagarde has already stated that the central bank may end its bond-buying stimulus scheme in the third quarter as headwinds from the Ukraine war worsen raging inflation. In other news, several European Union states are pushing for the organization to apply further sanctions as soon as possible in reaction to multiple accusations that Russian troops massacred unarmed citizens in Ukrainian towns.

  • Monday 04/04/2022 - Eurogorup meetings 
  • Tuesday 04/05/2022 - Markit Composite and Service PMI (Mar) 
  • Wednesday  04/06/2022 - PPI ¦ ECB Lane Speech 
  • Thursday  04/07/2022 - Retail Sales (Feb) 

GBP

The British Pound closed 0.18% lower followed by regaining its momentum on Monday morning. The British currency declined on fears of fresh sanctions against Russia as images emerged from recaptured areas near Kyiv showing hundreds of civilians killed. Furthermore, the continuing Russian troop withdrawal from the Kyiv region and elsewhere in northern Ukraine brought some encouraging signals, as peace talks are set to restart via video conference. Meanwhile, the S&P Global/CIPS UK Manufacturing PMI was revised marginally down to 55.2 in March 2022 from 55.5 in February, indicating the slowest expansion in factory activity since February 2021. Simultaneously, input prices grew for the twenty-eighth month in a row, with the pace of growth reaching a three-month high. Finally, Business confidence plummeted to a 14-month low as a result of growing geopolitical tensions, inflationary pressures, and labour shortages. In the markets, on Monday, the FTSE 100 traded marginally higher, beating its European peers, thanks to advances in defense firms and precious metal miners. Coming up, In the first half, investors will hear from Bank of England Governor Andrew Bailey on Monetary Policy and Inflation.

  • Monday 04/04/2022 - BoE Bailey Speech 
  • Tuesday 04/05/2022 - Markit Composite and Service PMI (Mar) 
  • Wednesday  04/06/2022 - Construction PMI (Mar)
  • Thursday  04/07/2022 - Halifax House Price Index (Mar)

JPY

The Japanese Yen closed 0.67% lower in the previous session against the greenback. The Yen remains little changed on Monday as the Investors were particularly cautious after an inversion in Treasury yields raised concerns about the U.S. economy, while threats of more sanctions against Russia kept sentiment in check. Meanwhile, Japan's manufacturing PMI improved by 1.4 points to 54.7 in March, supported by a rebound in output and stronger demand, marking the sector's 14th consecutive month of expansion. In addition, the yield on the benchmark Japan 10-year JGB rebounded to 0.23% on profit-taking, following the Bank of Japan's huge government bond buy program last week, which led yields to fall by more than 3 basis points. Elsewhere, in tumultuous trading on Monday, the Nikkei 225 Index advanced 0.25% while the wider Topix Index nudged up 0.5% as Japanese equities matched Wall Street gains while losses in chip-related sectors weighed on the indices.

  • Tuesday 04/05/2022 - Household Spending (Mar) 
  • Friday  04/08/2022 - Current Account (Feb)

CAD

The Loonie closed 0.14% lower in the previous session before regaining its momentum on Monday morning. The Canadian currency fell 0.3 percent versus the U.S. dollar in the recent week as oil prices fell and a shift in yield advantage between U.S. and Canadian bonds strengthened the U.S. dollar. The U.S. Treasury yields surged dramatically as the robust jobs report bolstered the case for the Fed to boost rates aggressively, with the U.S. 2-year yield trading 10 basis points higher than its Canadian counterpart. Meanwhile, the Bank of Canada is likely to raise interest rates by 50 basis points at its April 13th meeting, and by another 200-250 basis points this year, after hiking borrowing costs for the first time since March 2020 last month. The S&P/TSX Composite Index closed the week 0.29%, reflecting a good U.S. jobs report and ongoing peace talks between Russia and Ukraine. Furthermore, domestic morale improved in March, with Canada's manufacturing PMI rising to an 11-1/2-year high of 58.9.

  • Monday 04/04/2022 - BoC business outlook 
  • Tuesday 04/05/2022 - Trade Balance (Feb) 
  • Wednesday  04/06/2022 - Ivey PMI (Mar)
  • Friday  04/08/2022 - Employment Change (Mar) ¦ Unemployment rate (Mar)  ¦ Participation rate (Mar) 

MXN

The Mexican Peso closed 0.08% higher yesterday against the greenback before consolidating its gains this morning. The Mexican Peso rose to its highest level against the U.S. dollar in nine months, touching the mark for the first time since July 2021, as stronger commodity prices and interest rates boosted bulls' confidence. In March, the Mexican central bank raised interest rates for the seventh time in a row, to 6.5% in an effort to reduce inflationary pressures caused by the Ukraine conflict. Nonetheless, inflation hit 7.3% in February, and the economy narrowly avoided a recession at the end of last year. In other news, the seasonally adjusted manufacturing confidence index in Mexico fell to 52.2 in March 2022 from a downwardly revised 52.4 the previous month, the lowest in five months. In addition, the S&P Global Mexico Manufacturing PMI increased to 49.2 in March 2022, up from 48.0 the previous month. The latest report indicated that factory activity had contracted for the 25th straight month, with significant decreases in production, sales, and employment.

  • Monday 04/04/2022 - Consumer Confidence 
  • Thursday  04/07/2022 - CPI and Core CPI (Mar) 

CNY

The Chinese Yuan closed marginally higher in the previous session against the greenback. On Monday, the Yuan fell to 6.37 per dollar, extending losses from the previous session, after data showed China's manufacturing activity fell to a two-year low, heightening the anticipation of further policy easing. The Caixin China General Manufacturing PMI dipped to 48.1 in March, down from 50.4 the previous month, as the country confronts its most severe Covid-19 outbreak since the pandemic began. The weakening of China's economy strengthens the case for additional policy easing, with many predicting a reduction in the reserve requirement ratio in the second quarter. The likelihood of greater monetary easing at a time when global central banks are raising interest rates could possibly drive capital outflows and weaken the Yuan further. 

  • Wednesday  04/06/2022 - Caixin Service  PMI (Mar)

BRL

The Brazilian currency regained strength this past Friday, jumping more than 1.5%. The plateau is the strongest in more than two years. Meanwhile, on domestic inflation, The (Brazilian Institute of Geography and Statistics)  IBGE publishes the IPCA, which is the Central Bank's target index Brazilian. In February, the IPCA rose 1.01%, the highest result for the month since 2015. The expectation is that the March data has a slight deceleration, but prices should remain high. The appreciation of the Real against the Dollar, both in terms of interest rates and commodity prices, tends to continue with the inflow of capital into the stock exchange. The strengthening of the Brazilian currency contributes for the fall in inflation. Moreover, the collection of federal taxes and contributions totaled BRL 148.66 billion in February of 2022. It is the best result for the month of the Federal Revenue's historical series, which started in 1995. As a result,  the market will closely follow the issue of increasing civil servants federal. According to political analysts, there is very strong pressure coming from public servants and the government may not be able to hold. Finally, unemployment remains high but shows signs of retreating. There was much criticism in the press regarding the fall in the average worker's income, associated with rising inflation. 

  • Monday  04/04/2022 -  IPC-Fipe (Mar) ¦ Focus Bulletin ¦ Foreign Direct Investment (USD) (Feb)
  • Tuesday  04/05/2022 - PMI Composite Markit (Mar)
  • Wednesday  04/06/2022 -  IGP-DI (Mar) ¦ Foreign Exchange Flow
  • Thursday  04/07/2022 -  Vehicle Production (Mar) ¦ IPCA (Mar)
 

Want the Daily Market Pulse delivered straight to your inbox?

Sign up for a free account

Sign up for a free account

Access our convenient and secure online platform to process your international payments. Manage beneficiaries and view payment status and history at the click of a button.

Find out more
FX business solutions

FX business solutions

We provide tailored services to help companies make international payments and manage their foreign exchange risk

Find out more