United States Dollar:
Markets turned risk averse on Friday and as stock indices fell, including the Dow, the USD firmed up. GBP/USD fell to a low of 1.6721 as New York came online. It was also a response to the stronger than expected inflation data, namely the US Producer Price Index which showed that wholesale prices rose by 0.5% in March, the biggest gain since June. US consumer sentiment data was also positive and supported dollar gains across the board. The ECB President Mario Draghi was speaking over the weekend too and said in a speech that the central bank was increasingly worried by the impact of the high exchange rate. This saw the euro sold off in early market opening in New Zealand and it dragged on the pound a little too. GBP/USD opens this morning at 1.6730 with US retail sales likely to be the focus for markets today. We expect a range today in the GBP/USD rate of 1.6690 to 1.6780.
Euro:
The euro was dumped on market opening this week, this following a speech by ECB president Draghi over the weekend. Attending spring meetings of the IMF, Draghi said “the strengthening of the exchange rate would require, to make our monetary policy stance to remain equally accommodative, it would require further monetary policy accommodation”. “The strengthening of the exchange rate requires further monetary stimulus. That’s an important dimension for our price stability.” EUR/USD gapped from 1.3885 to 1.3835 in Wellington opening and it opens in London on the back foot at 1.3845. These comments are likely to resonate throughout the rest of the day. European Industrial Production is due this morning and may, if weaker than forecasts, lead EUR/USD down through 1.38. GBP/EUR opens at 1.2180. We expect a range today in the GBP/EUR rate of 1.2040 to 1.2120.
Aussie and Kiwi Dollars:
AUD/USD and NZD/USD have been steady overnight, losing a bit of ground following Draghi’s comments at the weekend. They open at .9392 and .8640 respectively. RBA Monetary Policy Meeting Minutes are due later tonight and will garner a lot of market attention whilst NZ inflation data is also due for release. GBP/AUD and GBP/NZD are both a touch higher at 1.7815 and 1.9370. We expect a range today in the GBP/AUD rate of 1.7745 to 1.7890.We expect a range today in the GBP/NZD rate of 1.9290 to 1.9440.
Data Releases for the next 24 hours:
AUD: Monetary Policy Meeting Minutes
EUR: Industrial Production m/m
GBP: BRC Retail Sales Monitor y/y
NZD: No data
USD: Core Retail Sales m/m, Retail Sales m/m, Business Inventories m/m
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