US Dollar Declines amid Improving Market Mood

US Dollar (USD) Slips amid Improving Mood

The US Dollar (USD) fell yesterday as a renewed appetite for risk among investors saw the safe-haven currency weaken.

Comments from the Federal Reserve’s Raphael Bostic may have added to USD’s downside. Although Bostic isn’t voting on policy this year, he said that he would opt for a pause if he were.

Later today, US retail sales are due out. Could a recovery in sales see USD regain ground?

Pound (GBP) Rises amid Risk-On Trade

The Pound (GBP) strengthened yesterday as an upbeat market mood lifted the increasingly risk-sensitive UK currency.

Expectations for today’s jobs data could also have played a part in the Pound’s success. With economists forecasting an uptick in wage growth, traders bet on more action from the Bank of England (BoE) to prevent pay increases further pushing up inflation.

This morning, however, UK jobs data missed forecasts. The unemployment rate unexpectedly ticked higher while average income increased less than anticipated. Sterling stumbled in response, although still-strong wage growth may limit GBP’s losses.

Euro (EUR) Undermined by Declining Industrial Output

The Euro (EUR) faced pressure early on during yesterday’s session after new data revealed a whopping 4.1% contraction in Eurozone industrial production in March.

Forecasts from the European Commission (EC) helped to cushion the currency’s losses. The EC upgraded its growth and inflation forecasts, suggesting the European Central Bank (ECB) may need to raise interest rates again.

Looking ahead, an expected slump in German economic sentiment could drag the Euro lower this morning.

Canadian Dollar (CAD) Buoyed by Rising Oil Prices

An uptick in oil prices lifted the commodity-linked Canadian Dollar (CAD) yesterday. However, CAD’s positive correlation with the US Dollar capped the currency’s upside.

This afternoon, the Canadian Dollar could decline as Canada’s latest inflation rate is forecast to fall.

Australian Dollar (AUD) Declines following RBA Minutes

The Australian Dollar (AUD) dropped overnight after the Reserve Bank of Australia’s (RBA) meeting minutes struck a less hawkish tone than investors had anticipated. Policymakers discussed easing inflation and worries about slow productivity growth.

New Zealand Dollar (NZD) Retreats as Risk Appetite Wanes

The New Zealand Dollar (NZD) initially firmed overnight before trimming its gains. Weaker-than-forecast Chinese data dented the market mood, which in turn pressured the risk-sensitive ’Kiwi’.

Samuel Birnie

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