Daily Currency Update

The German IFO business climate data released on Wednesday signaled a resurgence of optimism, marking its third consecutive increase. This data contributes to significant evidence of the German economy reaching a turning point and beginning to emerge from a downturn. The upturn was notably fueled by improvements in both current assessments and expectations components. Meanwhile, in the United States, durable goods orders surged by 2.6%, equivalent to $7.3 billion in March. Notably, the transportation equipment sector led this positive trend with a remarkable increase of 7.7%. However, excluding transportation, new orders experienced a more modest growth of 0.2% for the reported month. These figures surpassed the forecasted 2.5% increase, representing a significant jump from the previous 1.3%.

GBP/USD was at 1.2300 on Monday but has been on the rise since and sits just under 1.2500 this morning. GBP/EUR has also been on the incline and is back above 1.1650. As we have seen USD selling this week due to the change in sentiment about interest rate cuts in the US, EUR/USD has advanced back above 1.0700.

Daily Currency Update

Tuesday was quite eventful in terms of economic data releases. The PMI reports from the UK and Europe indicated an expansion in services, peering over the 50.00 gauge but manufacturing showed a contraction. In the US, both service and manufacturing data disappointed against previous and forecasted figures. A fall back below 50.0 was seen for manufacturing which was the first contraction announcement since December 2023. Services came in at 50.9 but as the first fall below 51.0 since November 2023. This showed that the US business activity expanded in April at the slowest pace this year and has led to the first decline in employment since 2020.

Alongside the heavy-weighted data for FX volatility, US new home sales were also released and showed a surge in March despite elevated mortgage rates. The economic data from the US likely fueled speculation that the Federal Reserve may need to implement interest rate cuts sooner than previously anticipated. This anticipation of looser monetary policy tends to weaken the US dollar as investors adjust their positions. As a result, we saw significant movements in currency pairs. GBP/USD jumped to 1.2460 on the news, after trading around 1.2325 at the start of Tuesday. EUR/USD similarly picked up, breaking through 1.0700 after trading as low as 1.0640 in the morning. GBP/EUR saw gains also but in a much narrower range than that seen with the USD. The manufacturing and service PMI data seemed to favor the GBP over the EUR.

Daily Currency Update

The New Zealand dollar is slightly stronger this morning when valued against the Greenback currently trading at US$0.5924 at the time of writing. The Kiwi dollar found support from an improved risk appetite, bolstering the NZD/USD pair. This positive shift follows reduced geopolitical tensions in the Middle East. However, the upside potential for the NZD/USD pair appears to be capped due to a hawkish sentiment surrounding the Federal Reserve's interest rate outlook for June. According to the CME FedWatch Tool, the probability of interest rates remaining unchanged in the June meeting has increased to 84.4%, up from the previous week's 78.7%. Looking ahead all eyes will be on New Zealand's monthly Trade Balance NZD data for March on Wednesday, followed by ANZ-Roy Morgan Consumer Confidence on Friday. There will be no commentary tomorrow due to the Anzac Day public holiday.

Daily Currency Update

The Australian dollar is stronger this morning when valued against the Greenback currently trading at US$0.6480 at the time of writing. The Aussie dollar continues its upward trajectory for the second consecutive session on Tuesday, buoyed by improved risk appetite. On the data front yesterday Australia's Judo Bank Purchasing Managers Index (PMI) Composite rose to a 24-month high of 53.6 in April compared to the previous month's 53.3. The Australian private sector ticked up into an accelerated pace of growth in the second quarter bolstered primarily by Services sector growth. Australia's Manufacturing PMI Output rose to an eight-month high of 49.1 compared to March's 45.7, brushing off a 2-month low of 54.2 in the Services Business Activity compared to March's 54.4. Looking ahead today the Australian Bureau of Statistics will release the latest Consumer Price Index (CPI) which is expected to increase from 0.6% to 0.8% for the last quarter. Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate. Finally, on Friday we will see the release of the Producer Price Index (PPI).  There will be no commentary tomorrow due to the Anzac Day public holiday.

Daily Currency Update

The Canadian dollar traded up this morning against the USD, however it was down versus the AUD, EUR, and GBP so far today. West Texas Intermediate (WTI) crude oil was up this morning to around 82.09. A gain of around 0.17% from yesterday’s levels. While there is not any notable data set to be released today in Canada, markets will be looking out for retail sales data tomorrow.

Daily Currency Update

The US Dollar Index (DXY) was down this morning around 0.35% to trade near 105.71 after the release of the Purchasing Manager’s Index (PMI) data. The Flash Manufacturing PMI, which surveys purchasing managers in the manufacturing industry about business conditions, came in lower than expected at 49.9 versus the anticipated 52. Similarly, Flash Services PMI, which focuses on the service industry, came in lower than expected at 50.9 versus the expected 52. This disappointing data pushed the USD again other major currencies including the EUR, CAD, AUD, and GBP so far today.

Daily Currency Update

The market was relatively quiet yesterday with minimal macroeconomic data. Although market participants were keeping an eye on ECB President Lagarde’s speech at Yale University. Unfortunately, he did not refer to monetary policy as expected by the market. The GBP/USD pair continued to decline, reaching a session low of 1.2300, a level not seen since November 2023. Similarly, the GBP/EUR pair also experienced a drop, falling below 1.1600.

Daily Currency Update

The New Zealand dollar is slightly stronger this morning when valued against the Greenback, currently trading at 0.5914 at time of writing. The Kiwi dollar clings to gains, as ebbing risks of widening Middle East conflict has improved demand for Asian currencies. Overall, the bearish force remains strong, while the bulls begin to give signs of potential recovery, highlighting the start of a possible bullish reversal. On the data front yesterday the Reserve bank of New Zealand released the latest credit card spending report. Seasonally adjusted domestic billings on New Zealand issued cards were $3.9 billion in March-24. Seasonally adjusted total billings in New Zealand were $4.6 billion in March-24, up 0.7 percent from February-24, and up 1.4 percent from March-23. Credit limit utilisation (the ratio of total advances outstanding to total allowable credit limits) decreased from 29.8 percent at the end of February-24 to 29.6 percent at the end of March-24. Looking ahead for the rest of the week and on Wednesday we will see release of the latest Trade Balance figures for the previous month.

Daily Currency Update

The Australian dollar is stronger this morning when valued against the Greenback, currently trading at 0.6446 at time of writing. The Aussie dollar yesterday fared better than most of its rival counterparts against the Greenback partly because commodities, which Australia is a major exporter of, are holding their value better than expected. The supportive effect may not last, however, since Iron Ore, which is Australia’s largest export, could be peaking and about to roll over. The Australian dollar may encounter challenges ahead, particularly as domestic inflation continues to moderate, aligning with the Reserve Bank of Australia's (RBA) latest forecasts. Furthermore, the persistently tight labour market could lead to calls for an RBA rate reduction before the year's end. On the data front, today we will see the release of the Purchasing Managers' Index (PMI). On Wednesday, the Australian Bureau of Statistics will release the latest Consumer Price Index (CPI), which is expected to increase from 0.6% to 0.8% for the last quarter. Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate. Finally on Friday we will see the release of the Producer Price Index (PPI).

Daily Currency Update

A multitude of Canadian data showed markets a hopeful growth in the Canadian economy. The Industrial Product Price Index (IPPI) came in at 0.8%, the same as expectations and below the previous 1.1%. The New Housing Price Index (NHPI) was at 0%5, slightly worse than the expected and previous 0.1% levels. The Raw Materials Price Index (RMPI) showed a better-than-expected level at 4.7%, versus the expected 2.9% and previous 2.1%. The Bank of Canada (BoC) and the Federal Reserve are expected to diverge on next steps as inflation in Canada has turned to the downside and economic growth has picked up. As a result, the CAD is expected to weaken against USD according to Goldman Sachs’ strategists. In oil news, West Texas Intermediate (WTI) crude oil was down 0.33% to 81.80 this morning.