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CNY

Caution Prevails as First Quarter Winds Down

Financial markets remain broadly rangebound this morning as month- and quarter-end position squaring drives investors to cut risk. The dollar is essentially unchanged, Treasury yields and crude prices are softening, and North American equity bourses are setting up for a weaker open. More evidence of strength in the US economy was delivered yesterday. Data releases showed home prices climbing at the fastest annual pace since 2022 in January, durable goods orders rising more than expected in February, and the Conference Board’s measure of consumer confidence ticking higher in March. The “no-landing” consensus among economists keeps growing more pervasive, bolstered by...

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Holding firm

• Limited moves. Equities mixed, bond yields drifted back, & the USD is little changed. AUD is close to where it was this time yesterday.• Low vol. Measures of equity & FX volatility are now well below average. Markets could be complacent to the macro & geopolitical risks still lurking.• AU CPI. The monthly CPI indicator due today. More info on services is provided. We think inflation could re-accelerate by more than expected. Limited moves across markets overnight with not much new information coming through to shift the dial. In contrast to the small rise across European equities US stocks...

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Waiting game

• Quiet start. Global equities mixed. Bond yields drifted higher. USD a little softer. AUD has clawed back a bit of ground over the past 24hrs.• CNH & JPY. Authorities in China have pushed back on recent CNH weakness. Rhetoric from Japanese officials about JPY weakness has also ramped up.• Data flow. US durable goods orders in focus tonight. Locally, the monthly CPI indicator is due tomorrow & retail sales are released on Thursday. It has been a typically quiet start to the holiday shortened week with limited new news over the past 24hrs. Most of the major global equity...

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Liquidity Ebbs Into Holiday-Shortened Week

The trade-weighted dollar is holding steady and equity futures are poised to open lower as market participants prepare for a lower-intensity, holiday-thinned trading week. Treasury yields are ticking higher, oil prices are up modestly, and risk-sensitive units like the Canadian dollar are trading sideways ahead of a week dominated by the release of the Federal Reserve’s preferred inflation indicator – when North American markets will be closed for Good Friday. Thin liquidity could boost the appeal of safe haven currencies in the days ahead, but some mean reversion could play out over a longer time horizon. With the global economy...

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Can the stronger USD last?

• Firmer USD. US equities consolidated, bond yields dipped, while the USD’s upturn continued despite some better than expected European data.• Weaker CNH. A catalyst behind the USD strength was the weaker CNH. Given its tight correlation the lift in USD/CNH exerted more pressure on the AUD.• Event radar. US durable goods orders & the PCE deflator are due. There are also a few Fed speakers. Locally, the monthly CPI indicator & retail sales are released. After a run of positive days US equities consolidated on Friday near record highs (S&P500 -0.1%). That said, over the week the S&P500 still...

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