Pound Strengthens, USD Rebounds as Inflation Surges

Pound News: Sterling Firms on Latest UK GDP Data

The Pound has been steady for much of the day following the latest UK GDP release this morning which, although confirmed a contraction in growth during Q1, also showed that the economy grew by 2.1% in March, the most since August as the UK began to reopen from the strictest of coronavirus lockdown measures.

Sterling also found support in the latest industrial production figures from the UK for March which rebounded 3.6%, beating forecasts.

Euro News: Euro Supported by European Commission Growth Forecasts

The Euro has been supported today after the recent announcement from the European Commission (EC) that they have updated the Eurozone’s growth forecasts for the year to 4.3%, up from the previous 3.8%.

The Euro found further support in the latest German inflation rate for April which met forecasts in line with the European Central Bank (ECB) at 2%.

However, EUR exchange rates could come under some pressure due to the rebound in the US Dollar, and the negative correlation in the pairing.

US Dollar News: US Dollar Strengthens on US Inflation Data

The US Dollar rebounded sharply today after the latest US inflation rate data for April accelerated faster than expected.

US inflation jumped to its highest level since 2008 and came in above forecasts, rising to 4.2% in April. The jump in inflation has caused US bond yields to soar as markets become more cautious surrounding higher inflation.

Looking ahead, initial jobless claims data released tomorrow could add support to USD exchange rates if the number of claims decline as forecast.

Canadian Dollar News: CAD Buoyed as Oil Prices Rise

The Canadian Dollar made solid gains today as the commodity-correlated currency benefited from a rise in crude oil prices after US crude stocks experienced their biggest decline since January.

CAD exchange rates could strengthen further tomorrow following a speech by Bank of Canada (BoC) governor Tiff Macklem if he continues to strike a hawkish tone and indicates monetary policy tightening.

Australian Dollar News: ‘Aussie’ Weakens on Risk-Off Mood

The Australian Dollar plummeted today as a risk-off mood opened up the ‘Aussie’ to losses against many of its rivals today. Further limiting the Australian Dollar today has been the warning from the Commonwealth Bank of Australia (CBA) that Australia’s credit rating is at risk of being downgraded from AAA to AA+.

Upcoming Data

Thursday, 13th May

01:00    AU HIA New Home Sales MoM (Apr)

02:00    AU Consumer Inflation Expectations (May)

13:30    CA PPI MoM Prel (Apr)

13:30    US Initial Jobless Claims (08/May)

13:30    US Core PPI MoM (Apr)

Friday, 14th May

13:30    CA Manufacturing Sales MoM (Mar)

13:00    US Retail Sales MoM (Apr)

15:00    US Michigan Inflation Expectations Prel (May)