Headlines
Pound Down against Euro, Up against US Dollar –
Confidence holds steady
Euro Trending Higher before CPI –
German retail sales flop
US Dollar Little Changed after FOMC Statement –
Slowdown considered temporary
Canadian Dollar Expected to Fluctuate –
Growth data ahead
Sterling
Although Sterling managed to hold its own against a broadly softening US Dollar on Wednesday, the currency declined against the Euro and fell back to trending in the 1.38 range.
Early in the European session the Pound was supported by Rightmove’s latest house price report, which showed unexpected 1% month-on-month growth in April.
However, Sterling later slipped as the Confederation of British Industry’s (CBI) Reported Sales index dropped from 18 to 12 instead of advancing to 25 as projected.
The currency was little changed following the publication of the GfK Consumer Confidence Survey for April as the measure of sentiment held at 4. The day’s only other UK ecostat, the Lloyds Business Barometer, is unlikely to spark much Pound movement.
Euro
The negotiations between Greece and its creditors may be rumbling on but the Euro was able to rebound against a number of its rivals in response to German inflation data.
Germany’s CPI accelerated from 0.3% to 0.4% on the year, as expected, while the EU Harmonised measure beat forecasts for a reading of 0.2% by rising from 0.1% to 0.3%.
As the report increases the odds of Thursday’s inflation data for the Eurozone as a whole showing improvement, the common currency held gains against rivals like the US Dollar and Pound despite German Retail Sales plummeting in March.
Sales dropped by -2.3% on the month following a positively revised decline of -0.1% in February.
Should the Eurozone’s Consumer Price index move from -0.1% to 0.0%, as expected, the Euro could post further gains.
US Dollar
Prior to the hotly-anticipated Federal Open Market Committee (FOMC) policy statement, the US Dollar maintained a bearish relationship with several of its currency counterparts. Demand for the ‘Greenback’ received yet another knock as US first quarter growth data revealed a far slower-than-predicted rate of expansion and ‘Cable’ advanced above the 1.54 level before the close of European trading.
However, as the FOMC used its announcement to stress that the lacklustre performance of the world’s largest economy was largely the result of temporary factors, the US Dollar failed to fall much further after it was issued.
Today’s US Personal Consumption Expenditure and Initial Jobless/Continuing Claims figures could weigh on the ‘Greenback’ if they fail to impress.
Canadian Dollar
Although both Canada’s Industrial Product Price and Raw Materials Price reports came in above expected levels, Canada’s Producer Price Index showed a sharper-than-forecast annual slide.
The ‘Loonie’ accordingly drifted lower against peers like the Pound, but higher oil prices continue to lend the commodity-driven currency support ahead of the release of Canadian growth data for February.
The Canadian economy is believed to have contracted by -0.1% on the month, but a lower figure could revive Bank of Canada (BOC) rate cut bets and act as a drag on the Canadian Dollar in the hours ahead.
Less-than-impressive domestic data left the Australian Dollar trading in a broadly softer position at the close of the Australasian session.
Australia’s Export Price Index dropped by -0.8% in the first quarter, rather than stagnating as forecast, while the Import Price Index defied expectations for a 1.0% gain by sliding -0.2%.
Before the weekend Australia’s AiG Performance of Manufacturing Index and China’s Manufacturing/Non Manufacturing PMIs are likely to inspire a final flurry of ‘Aussie’ movement.
Although the Reserve Bank of New Zealand (RBNZ) opted to leave interest rates unchanged at its latest policy meeting, the central bank implied that borrowing costs could be negatively revised in coming months.
The dovish rhetoric saw the ‘Kiwi’ fall by almost 1% against the Euro and lose ground against Sterling and the US Dollar.
Data Released Today
10:00 EUR Euro-Zone Consumer Price Index Estimate (YoY) (APR)
10:00 EUR Euro-Zone Unemployment Rate (MAR)
13:30 CAD Gross Domestic Product (YoY) (FEB)
13:30 USD Personal Consumption Expenditure Core (YoY) (MAR)
13:30 USD Continuing Claims (APR 18)
13:30 USD Initial Jobless Claims (APR 25)