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The US dollar marginally rises after additional cash injection in China

USD - United States Dollar

It’s another quiet day for the US dollar index, but today it is increasing 0.1 percent along with global and North American equity markets. The reason for this is likely the earnings reporting season, which began with US banks reporting better than expected earnings.

The catalysts all seem to be aligned to a less volatile FX market. For instance, Chicago Fed President Charles Evans said he could see the central bank holding rates stable until late 2020. He won’t endorse rate hikes until inflation recovers. On the flip side, Boston Fed leader Eric Rosengren said he favors moving from a 2% inflation objective to a target range, allowing inflation to exceed 2% in positive economic environments.

Talks between the US and China seem to be improving, and we've seen an arrangement on essential agricultural goods with soybeans. China is considering a US request to switch some tariffs on key agricultural goods to other products. Also, European negotiators got approval this week to get started on trade negotiations with the US, aiming to arrange a deal by September.

Key Movers

Lender prices increased in China (in their equity prices) after the PBOC's decision to inject cash into the financial system eased concerns that officials would hold back on stimulus. Chinese banks extended 1.69 trillion Yuan ($252 billion) in new loans in March. The US dollar rallied, and the Yuan weakened. The surge in new Yuan loans implies that the Chinese Central Bank’s easing policies are at work. According to Shuli Ren from Bloomberg, the PBOC has done a more than an excellent job at fending off pressure to ease its policy stance.

Expected Ranges

USD/CAD: 1.3300 - 1.3400 ▼

EUR/USD: 1.1290 - 1.1360 ▲

GBP/USD: 1.3035 - 1.3109 ▼

AUD/USD: 0.7150 - 0.7200 ▲

NZD/USD: 0.6755 - 0.6797 ▲