US Dollar Index regains some lost ground
Daily Currency Update
The US Dollar Index (DXY) edged up this morning to trade near 105.89 following a 0.4% loss yesterday. Investors continued to analyze the most recent economic data and awaits tomorrow’s US Gross Domestic Product (GDP) data report and Friday’s Personal Consumption Expenditure (PCE) index. Markets also anticipate the Fed’s rate decision meeting early next week. Many expect the Fed to hold rates at 5.5% as they still want inflation to ease more before reducing rates.Key Movers
The EUR traded slightly down today compared to yesterday’s session, to trade near 1.063. Despite expectations for a 75 basis point (bps) easing of interest rates by the European Central Bank (ECB), the EUR/USD is not expected to rise significantly.In the UK, the pound rose nearly 1% against the US dollar yesterday largely due to a weaker USD and strong UK Manufacturing Purchasing Manager’s Index (PMI) which were revised higher to 50.3 in March from a preliminary 49.9. Bank of England (BoE) Chief Economist Huw Pill had hawkish comments with concerns about inflation, but the market adjusted its expectations quickly by slightly reducing expectations of rate cuts, but a 25 bps decrease in August is still anticipated
The USD/CAD pair nudged higher today so far to trade near 1.372 amid weaker than expected retail sales levels. Statistics Canada released retail sales data for March showing a 0.1% contraction against 0.3% in February and expectations of a 0.1% increase. Lower retail sales data meant weak demand by households, consequently forcing factories to reduce prices. This could lead to a decline in the consumer price inflation which would push the Bank of Canada (BoC) to start reducing interest rates earlier than expected. Current market expectations are for rate reductions in June.
Expected Ranges
- EUR/USD: 1.06781 - 1.07142 ▼
- GBP/USD: 1.2423 - 1.2465 ▼
- AUD/USD: 0.64845 - 0.65296 ▲
- USD/CAD: 1.36548 - 1.37225 ▲