Solid US Inflation Boosts US Dollar, Canadian Dollar Shrugs off Oil Weakness

Pound News: Political Jitters Add to Sterling Softness

Friday’s weaker-than-expected UK gross domestic product data kept the Pound (GBP) on a softer footing at the start of the week.

With the odds of a May Bank of England (BoE) interest rate hike falling GBP exchange rates also came under pressure from the latest domestic political developments.

If April’s manufacturing PMI shows an easing in sector growth this could add to the weakness of the Pound today.

 

Euro News: Stronger German Inflation Failed to Boost Single Currency

While the German consumer price index bettered forecast in April this was not enough to encourage greater confidence in the Euro (EUR).

As German retail sales were found to have contracted unexpectedly on the month in March confidence in the outlook of the Eurozone’s powerhouse economy was naturally shaken.

Worries over the political deadlock in Italy may keep EUR exchange rates under pressure in the near term.

 

US Dollar News: Investors Remain Confident Ahead of Fed Meeting

As the latest US personal consumption expenditure core reading strengthened in line with market expectations the mood towards the US Dollar (USD) improved.

With the Federal Reserve’s preferred measure of inflationary pressure rising the odds of a more aggressive pace of monetary tightening were seen to increase.

Any softening in the ISM manufacturing index may put a dent in the bullishness of USD exchange rates this afternoon, however.

 

Canadian Dollar News: Rising Industrial Product Prices Offset Oil Worries

A solid uptick in March’s industrial product price index offered fresh support to Canadian Dollar (CAD) exchange rates, boosting confidence in the domestic outlook.

Although oil prices came under some pressure as a result of another increase in the US rig count this was not enough to weigh down the Canadian Dollar yesterday.

This afternoon’s Canadian gross domestic product data is likely to provoke jitters for CAD exchange rates, particularly if growth rebounds on the month.

 

Australian Dollar News: Weaker Inflation Estimate Limited ‘Aussie’ Demand

Markets were disappointed to find that the TD Securities inflation estimate for April had dipped slightly from 2.1% to 2.0%.

With the Reserve Bank of Australia (RBA) looking set to leave interest rates on hold for the foreseeable future the appeal of the Australian Dollar (AUD) naturally diminished.

If market risk appetite continues to weaken ahead of the Fed’s May policy decision AUD exchange rates are likely to remain on a softer footing.

 

Upcoming Data

 

Tuesday, 1 May

09:30     UK Manufacturing PMI

13:30     Canada Gross Domestic Product

15:00     US ISM Manufacturing Index

 

Alastair Archbold

Alastair Archbold

Currency Trader

[email protected]