Daily Currency Update

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The Greenback plunges after dovish comments by Fed officials

USD - United States Dollar

The U.S. dollar got clobbered in yesterday’s trading session, falling 0.71 percent from the highest to the lowest level of yesterday’s trading session. This followed the Fed Vice Chair Clarida's dovish commentary. Another catalyst for a weak U.S. dollar came from St. Louis Fed President James Bullard, who said an interest rate cut "may be warranted soon." The Greenback rallied briefly and then rolled over into the close, pushing the Loonie higher against the Greenback. Bullard said that lowering rates in the U.S. soon could, "…help recenter inflation and inflation expectations." He added that it could also "... provide some insurance in case of a sharper-than-expected slowdown."

On the release side, new orders for U.S. goods fell in April, and shipments dropped by the most in two years, indicating continued weakness in manufacturing activity that could undermine the broader economy. Factory orders in April came in at -0.8 percent, pulled down by weak demand for transportation equipment, computers, electronic orders, and primary metals.

A few hours ago, Powell discussed monetary policy and opened the door for a rate cut, but only if the trade war continues or escalates.

Key Movers

In Australia, RBA cut 25 basis points as expected to a 1.25 percent cash rate. Part of the RBA's reason for lowering the cash rate was to, “… help make further inroads into the spare capacity in the economy. It will assist with faster progress in reducing unemployment and achieve more assured progress towards the inflation target.” Additionally, it noted that, “The Board will continue to monitor developments in the labor market closely and adjust monetary policy to support sustainable growth in the economy and the achievement of the inflation target over time.” Some economists see the RBA following up with another cut within three months, while market watchers expect the Aussie dollar to continue falling. The AUD/CAD is falling 0.09 percent this morning, and the AUD/USD pair retracts 0.04 percent to 0.9365 and 0.6975 respectively.

President Trump is suggesting through Twitter a "big Trade Deal" with the U.K., as soon as Britain casts off the "shackles" of European Union membership. The GBP/USD is rising 0.17 percent towards 1.2685 at the time of this writing.

Amid escalating trade tensions and market jitters, market participants are expecting that Swiss National Bank will take its key interest rate even further below zero as it faces a renewed Franc appreciation. However, this morning, the USD/CHF pair trades at 0.9930, 0.05 percent higher.

Expected Ranges

USD/CAD: 1.3380 - 1.3465 ▼

EUR/USD: 1.1205 - 1.1264 ▼

GBP/USD: 1.2676 - 1.2746 ▲

AUD/USD: 0.6960 - 0.7027 ▲

NZD/USD: 0.6595 - 0.6628 ▲