US Dollar Climbs despite GDP Slowdown

US Dollar (USD) Firms amid Fed Rate Hike Bets

The US Dollar (USD) ticked higher during yesterday’s European session, recouping some of its overnight losses, as markets increased their bets on another rate rise from the Federal Reserve.

The US GDP data triggered some volatility in the afternoon, as economic growth slowed more than forecast. However, signs of persistent inflationary pressures cemented expectations of a Fed hike next month, thereby boosting USD.

Today, the Fed’s preferred measure of inflation – the core PCE price index – is in the spotlight. Will further evidence of sticky inflation see the ‘Greenback’ climb higher?

Pound (GBP) Rudderless in Absence of Data

The Pound (GBP) traded without a clear directional bias yesterday amid a lack of UK economic data.

Adding to the mixed movement, concerns about the attractiveness of the UK’s investment landscape put some pressure on Sterling while ongoing Bank of England (BoE) rate hike bets limited GBP’s losses.

British data remains in short supply today, so Sterling could continue to trade in a wide range against its peers.

Euro (EUR) Declines as Inflation Expectations Ease

Below-forecast data dented the Euro (EUR) yesterday. The Eurozone’s economic sentiment index effectively stalled in April, while a decline in consumer inflation expectations dampened European Central Bank (ECB) rate rise bets.

The common currency also struggled due to its negative correlation with the US Dollar, which strengthened.

Today brings some notable Eurozone data releases, including Eurozone GDP and German inflation. If the former shows a return to growth and the latter indicates persistent inflationary pressures, EUR could climb.

Canadian Dollar (CAD) Enjoys USD and Oil Strength

The Canadian Dollar (CAD) gained ground yesterday, with the ‘Loonie’ enjoying its positive relationship to rising oil prices and a stronger US Dollar.

Looking ahead, Canadian GDP data is the focus. Could a slowdown in growth weigh on CAD?

Australian Dollar (AUD) Wavers amid Tepid Market Mood

The Australian Dollar (AUD) wobbled overnight as a mixed market mood left the risk-sensitive ‘Aussie’ to trade without a clear direction. A hotter-than-forecast PPI reading failed to lift the currency.

New Zealand Dollar (NZD) Edges Up as Consumer Confidence Rises

The New Zealand Dollar (NZD) posted modest gains last night after consumer confidence improved more than expected in April.

Samuel Birnie

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