Free Trial

Bolstered Risk Sentiment Weighs On Greenback, CNH Surges

  • US Dollar sentiment is on a downward trajectory to start the week, with weakness across the board on Monday. Dollar indices have shed around 0.35%, with the DXY crossing below the 50-day moving average for the first time since Feb 23rd. Currency moves largely fizzled out after the WMR fix with US Memorial Day holiday sapping volatility across markets.
  • The catalyst for the sell-off appears to be continued risk-on flows, with global equity benchmarks improving on Friday’s advance.
  • Bolstered risk sentiment stems from China Covid/stimulus news where Shanghai will scrap unreasonable restrictions to accelerate the resumption of work and production and promote consumption and investment after a two-month lockdown to curb the spread of Covid-19.
  • This explains why we have seen outperformance by CNH relative to high beta G10 FX moves. USD/CNH saw a sharp drop through 6.6900, and is now seen 0.75% below Friday’s closing levels at 6.67 as of writing.
  • Broad optimism also lent support to the likes of AUD, NZD and CAD who all saw particular gains against the JPY and CHF, underperforming across G10 currencies as expected.
  • EURUSD continues to edge higher, gaining close to a half percent, narrowing the gap with the 1.08 mark and the bear channel top seen at 1.0822, which remains the nearest objective for the current bull cycle playing out.
  • In emerging markets, USDTRY (+0.99%) continues to trend higher, with Monday prices holding just below the May highs of 16.4668. The pair maintains a bullish tone following recent gains and last week’s break of the 16.00 handle.
  • Japanese activity data will precede Chinese PMIs during Tuesday’s APAC session. Eurozone inflation data headlines the European docket. Elsewhere, Canadian GDP, US consumer confidence and the MNI Chicago Business Barometer™ are other data points of note.

To read the full story



MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.