Weekly FX Commentary June 16, 2021: USD edges up amid increased inflation

Several key inflation figures were announced last week. China’s May inflation rate came in lower than expected on Wednesday. By contrast, inflation readings in the US, announced on Thursday, increased at a faster rate than the market anticipated, with US headline inflation at 5.0% YoY and US core inflation at 3.8% YoY. As a result, the USD appreciated against major currencies as market expectations of Fed tapering increased.

Weekly FX Commentary June 08 2021: Upside pressure on RMB remains strong amid global recovery

Albeit lower than expected, China’s trade surplus further increased in May according to yesterday’s official announcement, as China continues to benefit from strong global demand.

May 2021 Monthly Market Commentary: Biden’s massive new spending plan to fuel the reflationary trend

In May, the market’s risk-on sentiment was supported by the gradual global economic recovery – country by country – as well as better-than-expected corporate earnings. Meanwhile, central banks confirmed their near-zero short-term interest rate policy, a key factor to maintaining the high price level of stock markets in the West.

Weekly FX Commentary June 01, 2021: Biden’s 6 trillion budget proposal further weakens the USD

Yesterday, People’s Bank of China (PBoC) raised the reserve ratio requirement for foreign exchange from 5% to 7% in an attempt to curb the yuan’s appreciation. Although this will reduce the supply of US dollars and other foreign currencies onshore China such as EUR & JPY, it is unlikely to have a lasting impact on the ongoing USDRMB bearish trend.

Weekly FX Commentary May 26, 2021: Strong US PMI data has limited impact on USD

Last Friday, US Purchasing Managers’ Index (PMI) readings for May came in higher than expected although this provided temporary support to the US dollar against other major currencies, however, USD gains proved short-lived.

Weekly FX Commentary May 18, 2021: USD gains proved fleeting

The US dollar rally against most currencies, that immediately followed the higher-than-expected US April core inflation number, proved short-lived as the greenback lost 0.6% to the euro, 0.3% to the British pound, 0.8% to the Swiss franc, and 0.3% to the renminbi since last Thursday’s close.