Headlines
GBP/EUR Softer before Manufacturing PMI –
Eurozone out of deflation
Euro Higher Across the Board –
CPI advances to 0.0%
US Dollar Gains after Jobless Claims –
‘Cable’ back below 1.54
Australian Dollar Falls –
RBA interest rate decision ahead
Sterling
Although both the UK’s GfK Consumer Confidence Survey and Lloyds Business Barometer held at previous levels, the Pound softened against the Euro and US Dollar on Thursday.
Speculation surrounding the outcome of next week’s general election was partly responsible for Sterling’s slide, but the dips in GBP/EUR and GBP/USD were more to do with positive data from the Eurozone and US.
The Pound could recoup yesterday’s losses before the weekend if the UK’s Manufacturing PMI shows the improvement expected. The gauge is forecast to have risen from 54.4 to 54.6 in April.
UK Mortgage Approvals and Consumer Credit numbers will also be of interest. Next week the main UK ecostats to be aware of include the Markit Construction/Services PMIs and Trade Balance numbers.
Euro
Over the course of Thursday’s European session, the Euro advanced on several of its most traded peers. The common currency failed to react to disappointing monthly German retail sales or employment figures but was bolstered by the Eurozone’s Consumer Price Index for April.
The rate of inflation in the currency bloc was shown to have accelerated from -0.1% to 0.0% on the year, taking the Eurozone out of deflation territory.
The result indicates that the Eurozone’s quantitative easing measures are having a positive impact and even separate data showing that the region’s unemployment rate held at 11.3% wasn’t enough to hinder the Euro’s uptrend.
Economic reports for the Eurozone are in short supply today, but any developments in the Greek bailout situation could have an impact on the common currency before the weekend.
US Dollar
After declining steadily for much of the week, the US Dollar staged a modest rebound on Thursday.
The appeal of the ‘Greenback’ increased as the number of people applying for first time unemployment benefits in the US was shown to have fallen by considerably more than expected in the week ending April 25th.
The Initial Jobless Claims figure had been forecast to print at 290K, down slightly from the negatively revised 296K of the previous week, so the 262K number was a pleasant surprise.
The US Dollar recouped losses against the Pound following the report’s publication and moved higher against several of its other currency counterparts.
Further US Dollar gains could be on the cards if today’s US ISM Manufacturing and Construction Spending reports come in at forecast levels.
As the end of the week approached the Canadian Dollar softened against the US Dollar, Pound and Euro.
The commodity-currency’s downtrend occurred even as Canada published better-than-forecast growth data for February and oil prices posted their biggest monthly gain since 2009.
The Canadian Dollar came under pressure as a report by the OPEC revealed that oil supply hit its highest level for more than two years in April.
Later today ‘Loonie’ movement could be inspired by the RBC’s Canadian Manufacturing PMI. The gauge printed at 48.9 in April, below the 50 mark separating growth from contraction, and another sub-50 figure could limit demand for the Canadian Dollar.
Australian Dollar
Speculation surrounding the likelihood of the Reserve Bank of Australia (RBA) announcing an interest rate cut after next week’s policy meeting dragged the Australian Dollar broadly lower overnight.
The ‘Aussie’ fell back below 79 cents against the US Dollar despite China’s Manufacturing PMI holding at 50.1 in April. A decline to 50.0 had been expected.
Australia’s AiG Performance of Manufacturing Index was also shown to have advanced from 46.3 to 48.0 last month while the nation’s Producer Price Index accelerated by 0.5% in the first quarter.
RBA rate cut bets limited the impact of all of these reports and are likely to continue weighing on the ‘Aussie’ into next week.
The New Zealand Dollar followed its Australian relation lower and closed out the local session in a softer position against the Euro, US Dollar and Pound.
Just as RBA rate cut bets are weighing on the ‘Aussie’, the rising odds of the Reserve Bank of New Zealand Dollar (RBNZ) adjusting borrowing costs are muting demand for the ‘Kiwi’. If the RBA does reduce interest rates next week both the Australian and New Zealand Dollars can be expected to fall.
Data Released Today
09:30 GBP Markit UK PMI Manufacturing s.a. (APR) Medium
09:30 GBP Mortgage Approvals (MAR) Medium
09:30 GBP Net Consumer Credit (MAR) Medium
14:30 CAD RBC Canadian Manufacturing PMI (APR) Medium
15:00 USD ISM Manufacturing (APR) High
15:00 USD Construction Spending (MoM) (MAR) Medium