Financial Market Overview – May 22nd
Here’s what’s happening on Thursday, May 22nd:
Activity in the financial markets is relatively subdued this morning. Investors are eyeing the upcoming Purchasing Managers’ Index (PMI) data from Germany, the Eurozone, the UK, and the US. Additionally, today’s US economic calendar includes weekly unemployment claims and existing home sales data from April. Major central bank officials are expected to deliver speeches later on.
This Week’s US Dollar Price
The table below illustrates changes in the US dollar (USD) against various currencies for this week. Notably, the US dollar is performing weakest against the Japanese yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -1.17% | -1.02% | -1.38% | -0.79% | -0.58% | -0.72% | -1.33% | |
| EUR | 1.17% | 0.13% | -0.16% | 0.45% | 0.72% | 0.52% | -0.16% | |
| GBP | 1.02% | -0.13% | -0.60% | 0.32% | 0.59% | 0.39% | -0.29% | |
| JPY | 1.38% | 0.16% | 0.60% | 0.61% | 0.97% | 0.88% | 0.10% | |
| CAD | 0.79% | -0.45% | -0.32% | -0.61% | 0.23% | 0.07% | -0.61% | |
| AUD | 0.58% | -0.72% | -0.59% | -0.97% | -0.23% | -0.20% | -0.86% | |
| NZD | 0.72% | -0.52% | -0.39% | -0.88% | -0.07% | 0.20% | -0.68% | |
| CHF | 1.33% | 0.16% | 0.29% | -0.10% | 0.61% | 0.86% | 0.68% |
The heatmap reflects how various major currencies are changing. The first column shows the base currency, while the top row shows the estimated currency.
During early trading in Asia, the House Rules Committee approved President Trump’s extensive tax proposal. A full vote in the House is anticipated after today’s discussions. Meanwhile, the US Treasury is facing challenges, with weak demand noted at recent auction sales for 2020 notes. The 10-year US yield increased by more than 2.5% on Wednesday, surpassing 4.6%, a level not seen since February. After declining for three consecutive days, the US dollar index is fluctuating slightly above the 99.50 mark.
EUR/USD
It remains in a consolidation phase above 1.1300 through Thursday morning in Europe. The European Central Bank will later announce accounts from its Monetary Policy Conference.
GBP/USD
This pair peaked at over three years high at 1.3470 on Wednesday but has since lost some of its gains during US trading hours. It’s now moving within narrow ranges just above 1.3400 as the European session opens.
Japan’s Deputy Finance Minister for International Affairs stated earlier that foreign exchange levels were not discussed during recent meetings of Finance Ministers.
USD/JPY
This pair continues to trend downwards, currently trading below 143.50.
Gold
Gold has gained bullish momentum, rising above $3,300 on Wednesday. It’s currently around $3,330 during European hours. Reports suggest that President Trump indicated to European leaders this week that he’s not prepared to end the conflict, believing that Russian President Putin is ahead in this situation.
Risks of Sentiment FAQ
In finance, terms like “risk-on” and “risk-off” indicate how much risk investors are willing to take at a given time. When it’s “risk-on,” optimism is high, while in a “risk-off” situation, investors typically seek safer assets.
During “risk-on” phases, stock markets usually rise and other commodities tend to appreciate, with currencies from heavy commodity-exporting nations strengthening amid increased demand. Conversely, in “risk-off” times, bond values climb while safe-haven assets like gold and currencies like the yen and Swiss franc perform well.
Minor currencies, including the Australian and Canadian dollars, generally strengthen in “risk-on” environments, as their economies depend largely on exports, which increase in value. This is due to heightened demand anticipated from economic growth.
In “risk-off” situations, currencies like the USD, JPY, and CHF usually appreciate. The USD is regarded as safe due to being the world’s reserve currency, which investors trust amid crises. The JPY sees demand for Japanese bonds, while the CHF is favored for its robust banking laws, providing capital protection.
