US FX Handover: Loonie Dumps, Yen Pumps on Trump’s Mexican Standoff
Matt Weller, CFA, CMT May 31, 2019 3:51 PM
- President Trump’s decision to impose escalating tariffs on Mexican imports roiled risk appetite, taking bond yields sharply lower, with the benchmark 10-year treasury yield falling to 2.14%. 2-year yields dumped 14bps to trade at 1.93%.
- US data: Core PCE (April) came in at 1.6% y/y as expected. Traders nonetheless have increased bets that the Fed will cut interest rates this year, with the market pricing in90%+ odds of at least one rate cut this year.
- Canadian Q1 GDP printed at 0.4% annualized, below expectations of a 0.7% reading. Combined with oil’s nearly 5% drop, this made the loonie the weakest major currency on the day.
- The safe haven yen was the strongest major currency, boosted by risk aversion.
- Bitcoin stabilized after last night’s quick $1k dump, but downside risks remain.
- See the key data and themes traders will be watching next week!
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