Watching Iran, Central Banks and Inflation Data While Also Anticipating Nvidia’s 1Q Earnings Report – Currency Thoughts
Watching Iran, Central Banks and Inflation Data While Also Anticipating Nvidia’s 1Q Earnings Report
May 20, 2026
As has become increasingly common, same-day movement in Asian equity markets has been opposite in direction from the trends in Europe and North America. On this Wednesday, Pac Rim share prices closed lower, including losses of 1.7% in New Zealand, 1.3% in Australia, 1.2% in Japan and 0.9% in South Korea. The major euro area stock markets sport gains of more than 1.0%, and the British FTSE has risen 0.7%. Major U.S. equity indices are also flashing green, led by a 1.8% advance in the Russell 2000.
The improved appetite for risk is also reflected in ten-year sovereign debt yields. The U.S. Treasury yield, which hit a high of 4.7% earlier this week, has settled back to 4.62%. Yields fell today by a dozen basis points in Italy and the U.K., 10 bps in France, 9 bps in Spain, and 8 bps in Germany. The Japanese JGB yield, by comparison, is just a basis point lower.
The dollar also gave up ground, dropping so far today by 0.5% against the Korean won and Australian dollar, four bps versus the kiwi and peso, 0.2% relative to sterling and a single basis point each verus euro and yen. Swissy is steady.
West Texas Intermediate crude oil is nearly 1% lower but still extremely elevated at $107.8 per barrel. There’s been no break-through reported in ceasefire talks, and the Strait of Hormuz is allowing scant traffic. For today, however, investors have been distracted by the upcoming Nvidia quarterly corporate figures and allegations of U.S. federal government corruption that makes the Harding and Grant administrations look like candidates for sainthood.
The price of silver is nearly 1% firmer.
Analysts had been narrowly split over whether Bank Indonesia officials would hike their policy interest today, but practically nobody anticipated an increase of as much as 50 basis points to 5.25% that was announced. This move reverses the last two of six 25-basis point cuts administered between September 2024 and September 2025. Today’s bold action was done in spite of an 8-month low and in-target rate of consumer price inflation in April. Supporting the rupiah was a major incentive for the interest rate increase. ” The increase represents a further measure to strengthen Rupiah exchange rate stabilisation efforts against the impact of heightened global turmoil triggered by the war in the Middle East, as well as a pre-emptive measure to maintain inflation within the target corridor of 2.5±1% in 2026 and 2027 set by the Government.”
Indonesia’s policy decision had attracted the most attention ahead of the announcement but wasn’t today’s only instance of tightening monetary policy in the face of a Middle Eastern war that has global inflationary implications. The policy interest rate of the Central Bank of Mauritius also got raised today. The increase of 25 basis points to 4.75% followed one of 50 bps done in February.
Likewise, officials at the Central Bank of Iceland increased their interest rate by 25 basis points to 7.75%. The rate had also been increased by that increment in March, ending a 7-month span at 7.25%. Previously between October 2024 and March 2025, six reductions totaling two percentage points had been made in the rate. Icelandic inflation had retreated from 10.2% in February 2023 to 3.7% this past November, but it exceeded 5.0% in each of the first four months of 2026 including 5.2% in April. Today’s action is most likely not the final tightening. “The Committee is also prepared to tighten the monetary stance still further to ensure that inflation eases towards the target,”
In Nigeria, Africa’s most populated country, the central bank rate was left unchanged today. The decision comes after a pair of 50 basis point cuts last February and September and in spite of April’s five-month high rate of consumer price inflation (15.7%).
China’s 1-year and 5-year loan prime rates were again kept steady at 3.0% and 3.5% where they have been since 10-basis point reductions in May 2025. Despite recent signs of slower growth, rate cuts had not been expected.
Price data again featured prominently on today’s global calendar of economic data releases:
- A larger-than-anticipated drop in British CPI inflation to 2.8% in April reflects in part an imposed energy price cap.
- British producer price inflation jumped a full percentage point to 4.0% in the same month.
- Austrian CPI inflation climbed to a 4-month high in April of 3.4%.
- And South African CPI inflation of 4.0% in April was at a 20-month high and up from 3.1% in March.
- Czech producer price inflation of 1.0% was at a 16-month high and four percentage points above the January readin.
- German producer price inflation of 1.7% last month was the most in 35 months and well above -3.3% in February.
- Euroland consumer price data were left unrevised from preliminary April estimates that showed the overall index up 1.0% from March and 3.0% on a year-on-year basis.
- Estonian PPI more than doubled to a 3-month high of 1.8% last month.
Among other data news today, consumer confidence rose to a 3-month high in Poland this month but fell in Belgium to a 13-month low.
With the U.S. 30-year fixed mortgage rate jumping ten basis points last week to a 7-week high of 6.56%, mortgage applications slid 2.3%, more than reversing all of the prior week’s increase.
Danish GDP growth quickened last quarter, jumping 1.9% above the prior quarter’s level and to a 17-quarter high in year-on-year terms of 5.9%.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: Bank Indonesia, British CPI, Cental Bank of Iceland, Central Bank of Mauritius, Peoples Bank of China
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