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JPY

Surging Dollar Squeezes Global Markets

Treasury yields are holding yesterday’s gains and the dollar is steamrolling its way past an eight-month high this morning as global borrowing costs rise and threaten economies outside the US. This morning’s jobless claims data could deliver further evidence of a cooling in US labour markets. Initial claims have remained low in recent months, but the number of people on longer-term benefits is clearly creeping higher, aligning with a generalised rise in the unemployment rate. According to recent data releases, job openings are now below long-term trends, hiring rates are coming down, the vacancy-to-unemployed worker ratio is back to 2019...

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RBA’s inflation challenge

• Firmer USD. No major economic releases but bond yields & the USD rose overnight. USD/JPY around levels last traded in late-1986. AUD round trip.• AU inflation. Monthly CPI higher than anticipated. Odds of another RBA rate hike as soon as 6 August have risen. Relative trends should be AUD supportive.• Events. RBA Dep. Gov. Hauser speaks & US durable goods due. PCE deflator released Fri night. US Presidential Election debate tomorrow (Fri 11am AEST). Financial markets have livened up a bit over the past 24hrs. Although outside of Australia where yesterday’s monthly CPI data surprised and triggered a repricing...

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Dollar Keeps Winning Reverse Beauty Contest

Global bond yields are rising and the US dollar is trading on a firmer footing this morning after inflation surged unexpectedly in Canada and Australia, threatening to upend the rate cut consensus across developed markets and jeopardise growth outlooks. Australian price growth accelerated to its fastest in six months in May, knocking markets off balance and raising the likelihood of another rate hike this year. According to the Australian Bureau of Statistics, consumer prices rose at an annual pace of 4.0 percent in May, climbing from 3.6 percent in April and topping market forecasts that had been set at 3.8...

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Holding pattern

• Range trading. US equities rebound, while bond yields & the USD tread water. Upside surprise in Canadian inflation generated limited CAD impact.• AU CPI. May reading of the monthly CPI due today. Data will include more services prices. Consensus looking for annual inflation to re-accelerate.• US events. No major US data or speeches tonight. Durable goods (Thurs night AEST) & PCE deflator (Fri night AEST) the next key US releases. In the main global markets continue to range trade with Northern Hemisphere summer trading conditions kicking into gear. Unlike the modest falls across European equities (EuroStoxx50 -0.3%), US equities...

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Rebalancing Flows Drive Mixed Currency Outcomes

Month- and quarter-end rebalancing flows are driving the dollar down against most of its major counterparts this morning, providing a modicum of relief across a range of asset classes. S&P 500 and Nasdaq futures are edging higher after tumbling yesterday on a rotation out of technology sector stocks, Treasury yields are up almost imperceptibly, and the commodity complex is experiencing a mild bout of mean reversion. The Mexican peso is grinding higher after carry traders piled back in during yesterday’s session, seizing on wide rate differentials and falling volatility expectations to drive the exchange rate to a circa-1.4-percent gain. Investors...

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