All signs seem to be pointing to month-end adjustments and the approaching U.S. holiday weekend dominating economic instability this morning. For the second session in a row, markets are in positive territory and the greenback is under pressure against its peers. All this regardless that first quarter U.S. GDP data released yesterday were revised upwards to 1.1%. Of course, in the current context, nothing in this small increase would lead us to expect a U.S. rate hike, particularly since the USD’s recent momentum combined with the widening of credit spreads amount to monetary tightening.
As usual, many are unhappy with rapid currency movements, including the Bank of China, which intervened on the markets to stop the Yuan’s depreciation and capital outflows. To think that not so long ago, China was being criticized for favouring a weak CNY. The economic calendar is light again today. We will only be keeping an eye on U.S. Personal Consumption Expenditure and Personal Income data for May.
