US Dollar Firms vs Pound and Euro as US GDP Surges

Pound Rises on Economic Optimism

The Pound (GBP) trended higher on Thursday, with the currency benefitting from this month’s reopening of a large part of the UK’s economy, as well as the country’s ongoing success with rolling out vaccines.

However, tempering this upside in Sterling were concerns that a series of recent scandals could hurt Boris Johnson and the Conservative party in upcoming local elections.

Coming up, the focus looks to remain on domestic politics for GBP investors ahead of next week’s local and Scottish parliamentary elections.

Euro Slips despite Strong German Inflation Reading

The Euro (EUR) ticked lower yesterday, as the single currency’s negative correlation with the US Dollar (USD) saw it weaken as the latter rose.

This drop in the Euro came in the spite of Germany’s consumer price index reporting a stronger-than-expected rise in domestic inflation this month.

Centre stage today will be the Eurozone’s latest GDP figures. The preliminary figures are widely expected to report that the Eurozone economy shrank in the first quarter and confirm a double-dip recession which could push the Euro lower.

US Dollar Buoyed by Upbeat GDP

The US Dollar registered modest gains during yesterday’s trading session following the publication of the latest US GDP releases.

The figures reported that the US economy grew at a faster-than-expected pace in the first quarter of 2021. While this reflected well on the US Dollar, the upbeat figures also fuelled a risk-on mood which weighed on the safe-haven currency and limited USD gains.

Turning to today’s session the focus for USD investors will be on the latest US personal spending figures. Economists predict a massive surge in spending last month as people received their latest stimulus checks, which could translate into a boost for the US Dollar later this afternoon.

Canadian Dollar Firms amid Rising Oil Prices

The Canadian Dollar ticked higher on Thursday, as the appeal of the commodity-linked ‘Loonie’ was bolstered by a sharp uptick in oil prices.

Looking ahead, the publication of Canada’s latest monthly GDP release may drag on CAD exchange rates today as economists predict domestic growth will have slowed in February.

Australian Dollar Recovers on Upbeat Chinese PMI

After stumbling during Thursday’s European session, the Australian Dollar was able to mount a recovery overnight, with the China proxy ‘Aussie’ being bolstered as the Caixin Manufacturing PMI printed above expectations in April.

New Zealand Dollar Firms in Risk-On Trade

The New Zealand Dollar also trended higher in overnight trade, with the risk sensitive ‘Kiwi’ catching bids amidst a modest improvement in market sentiment.

Data Releases

10:00 EUR GDP (Q1)

10:00 EUR Inflation Rate (Apr)

10:00 EUR Unemployment Rate (Mar)

13:30 CAD GDP (Feb)

13:30 USD Personal Spending (Mar)

Matthew Andrews

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