Morning Bid: The Weak Currency Gang

Euro, Hong Kong dollar, U.S. dollar, Japanese yen, pound and Chinese 100 yuan banknotes are seen in this illustration, January 21, 2016. REUTERS/Jason Lee/File Photo

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A preview of the day ahead at Dhara Ranasinghe Markets.

The weak currency gang is gaining momentum.

The yen plunged to a new two-decade low against the dollar on Thursday after the Bank of Japan doubled down on its ultra-low yield policy. The euro, down 5% already this month, is at its lowest level in five years against the greenback, while the Chinese yuan also fell 4.6% in April, falling another 0. .8% Thursday.

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Given the magnitude and speed of these currency movements, it is worth watching what policy makers say or do, especially in the Eurozone where inflation is already at record highs.

All of these currencies – and many in emerging markets – are being crushed under the wheels of a runaway dollar, which hit five-year highs against a basket of peers, boosted by expectations of sharp U.S. interest rate hikes .

But another driver, arguably, for the yuan and the euro is the rate at which the global growth outlook is deteriorating. So, the data-rich day ahead could offer some clues on this.

An early reading of US economic growth in the first quarter is expected to show annualized growth of 1.1%, down sharply from 6.9% in the fourth quarter of 2021. Read more

That would be the slowest since the recession triggered by the COVID-19 pandemic.

Preliminary inflation figures from Germany could show if price pressures are starting to ease in Europe’s major economic power.

Expectations that the European Central Bank will raise interest rates as soon as possible brought no comfort to the euro, battered by fears that the currency bloc is headed for a sharp slowdown.

Stock markets, meanwhile, aren’t doing too badly, thanks to upbeat tech earnings. Facebook owner Meta (FB.O) beat Wall Street’s earnings forecast – its Frankfurt-listed shares rose nearly 19% after an after-market rally. Read more

Euro/dollar at 5-year low, dollar/yen at 20-year high

Key developments that should further guide markets on Thursday:

– StanChart earnings exceed estimates read more

– The growth of industrial production in Japan relieves

– German Preliminary CPI

– Eurozone business climate, sentiment

– The Swedish central bank announces its decision on interest rates.

– US Q1 flash GDP, E index/initial unemployment

– Auction of US 7-year Treasury bills

– Emerging markets: political meeting and press conference of the Russian Central Bank

– European profits: Standard Chartered, Sabadell, Nokia, Volvo, Swedbank, Capgemini, Sanofi, Pernod Ricard, Unilever, Barclays, Carlsberg, Beirsdorf, Nordea, Thales, Eni, St James Place, Whitbread,

– US revenues: Comcast, Mastercard, Elli Lilly, Caterpillar, Merck, Northrup Grumann, Hershey, Southwest Airlines, Lazard, McDonalds, T Rowe Price, Domino’s Pizza, Amazon, Apple, Intel

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Reporting by Dhara Ranasinghe; edited by Sujata Rao

Our standards: The Thomson Reuters Trust Principles.

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