Home Daily Commentaries USD climbing upward once more

USD climbing upward once more

Daily Currency Update

The US dollar climbed its way back upward over the last couple of days with gains against several major currencies. The risk-averse views across the markets are aiding the greenback in finding a relatively decent demand as a safe-haven. The Federal Reserve’s hawkish stance on the interest rate hikes continue to provide a supplementary cushion. The US Bureau of Economic Analysis released the Personal Consumption Expenditures (PCE) price index which moved 0.1% higher in March after rising 0.3% in February. In the last 12 months, the PCE index has increased 4.2% after climbing to the level of 5.1% in February.

Data released by the US Bureau of Labor Statistics showed that the Employment Cost Index (ECI), compensation costs for civilian workers, rose by 1.2% in the first quarter. These data releases and the positivity around the greenback has allowed the USD to maintain its gains from last week lows. The USD Index (DXY) further extended the optimism around the greenback, last seen trading near 101.94.

Key Movers

The sterling remains on the positive side against the USD for the third straight day, climbing to a two-week high trading at the 1.2540 level. GBP/USD is oscillating slightly due to rising expectations for another 25 basis point (bps) rate hike by the Bank of England (BoE) in May.

The EUR/USD pair has bounced back slightly to just below the 1.1000 levels, as the USD relinquished some gains and markets are still digesting disappointing results from the Economic and Monetary Union (EMU) as well as German annual HICP inflation data. Inflation in Germany declined to 7.2% on a yearly basis in April from 7.4% in March. This reading came in below the market expectation of 7.3%. Markets are eagerly waiting to hear the European Central Bank’s decision about upcoming rate hikes as to whether it will hike rates by 25 or 50 bps. The lower-than-expected inflation data from Germany hints it may be the former.

Another macroeconomic development shows Argentina has joined the club yuan and will conduct foreign trade business with China in yuan rather than USD. Argentina announced that they will begin to pay for Chinese imports in yuan rather than USD to limit the USD outflows. Oil prices moved slightly towards the higher side, but another monthly decline is suspected amid concerns of slowing global economic growth weighing heavily on crude demand as the year progresses. West Texas Intermediate oil was last seen trading at the 76.35 level.

Expected Ranges

  • EUR/USD: 1.0971 - 1.1043 ▲
  • GBP/USD: 1.245 - 1.2578 ▲
  • AUD/USD: 0.658 - 0.6637 ▼
  • USD/CAD: 1.3555 - 1.3665 ▼