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GBP

Markets Wait to Exhale

With market participants on hold ahead of several key US inflation prints, the dollar is essentially unchanged, Treasury yields are flat, and North American equity indices are moving sideways ahead of the open. Softness in this morning’s producer price data could touch off a relief rally, but the release shouldn’t be as market-moving as others in recent memory. Somewhat unusually, today’s measure of input costs is scheduled before the broader consumer price index is published, making it difficult to estimate the impact on the Federal Reserve’s preferred measure of inflation – the core personal consumption expenditures index – due for...

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Calm before the US CPI storm?

• Quiet start. Minimal moves in equities, bonds & FX overnight. AUD little changed despite the jump in base metal prices.• AU Budget. A lot has been pre-announced. Relief measures look set to be designed to lower near-term headline CPI. But this may not impact core CPI.• US & UK data. Ahead of the US CPI report, US Producer Prices are released tonight. Fed Chair Powell also speaks. In the UK, jobs/wages data is due. A quiet start to the new week. The limited news flow has kept markets range bound. The US S&P500 ended the session unchanged. US bond...

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Currencies Stabilise as Inflation Data Looms

Foreign exchange markets are holding steady this morning as traders take cover ahead of a series of critical inflation reports that could determine the outlook for rate cuts from the Federal Reserve this year. The dollar is little changed against its major rivals, Treasury yields are moving sideways, and North American equity futures are pointing to incremental gains at the open. Today’s Survey of Consumer Expectations from the New York Fed is likely to echo Friday’s equivalent from the University of Michigan, with inflation expectations rising toward a six-month high. Household views on inflation tend to follow changes in gas...

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US Exceptionalism Fades, Weighing On Greenback

The “US exceptionalism” trade took another blow yesterday morning when the Bureau of Labor Statistics said the number of Americans filing initial applications for unemployment benefits rose last week to an eight-month high. The jump in jobless claims – up 22,000 to a seasonally-adjusted 231,000 in the week ended May 4 – surprised economists and helped bolster expectations for rate cuts from the Federal Reserve, helping erode the dollar’s yield premium and lift other currencies in relative terms. Softness in the labour market dovetails with our belief that re-acceleration hopes for the economy have become overblown, and we think that...

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AUD bounces back

• Softer USD. A surprise jump in US weekly jobless claims exerted some pressure on the USD. Positive risk sentiment helped the AUD.• BoE signals. BoE further opened the door to a rate cut. European central banks are leading the pack in the next global easing cycle.• Divergence. Policy divergence between the RBA & others should be AUD supportive. As should the pick up in growth in China. A more upbeat tone across risk assets overnight with the major European and US stockmarkets rising ~0.3-0.5%, oil (WTI crude +0.7%) and copper (+1.3%) firmer, and the USD losing some ground. The...

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