In the European session, the USD started in the green, however continued its decline after the Fed indicated at last week’s FOMC meeting that a rate liftoff may not occur as quickly as the market once expected coupled with comments from Mester and Bullard this morning, who deviated from their usual hawkish tilt. Furthermore, Mester signalled that the Fed are equipped with easing tools should the US economy unexpectedly slowdown, however she did warn that she does not expect that to happen. Meanwhile, analysts at HSBC state that the USD is nearing the end of its bull-run and add that historically the move was overdone. Weakness in the USD came to the benefit of EUR/USD where the pair broke above 1.0900 and trade higher by over a point. Elsewhere, GBP/USD underperforms the major pairs with further uncertainty regarding the upcoming UK General election in May continuing to gain traction with the latest Populus poll showing Labour cutting their slight lead to 2 points against the Conservatives, while tomorrows CPI reading vs. Exp. 0.1% (Prev. 0.3%) is expected to get ever closer to deflationary territory with GBP weakness partially attributed to positioning ahead of the release.
Looking ahead, tomorrow provides a loaded data slate with French, German & US Manufacturing PMI’s alongside US & UK CPI, with close attention particularly on the inflation numbers as both central banks are focusing on these data points to justify a rate hike in the coming year.
Recommended Content
Editors’ Picks
EUR/USD clings to gains above 1.0750 after US data
EUR/USD manages to hold in positive territory above 1.0750 despite retreating from the fresh multi-week high it set above 1.0800 earlier in the day. The US Dollar struggles to find demand following the weaker-than-expected NFP data.
GBP/USD declines below 1.2550 following NFP-inspired upsurge
GBP/USD struggles to preserve its bullish momentum and trades below 1.2550 in the American session. Earlier in the day, the disappointing April jobs report from the US triggered a USD selloff and allowed the pair to reach multi-week highs above 1.2600.
Gold struggles to hold above $2,300 despite falling US yields
Gold stays on the back foot below $2,300 in the American session on Friday. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.6% after weak US data but the improving risk mood doesn't allow XAU/USD to gain traction.
Bitcoin Weekly Forecast: Should you buy BTC here? Premium
Bitcoin (BTC) price shows signs of a potential reversal but lacks confirmation, which has divided the investor community into two – those who are buying the dips and those who are expecting a further correction.
Week ahead – BoE and RBA decisions headline a calm week
Bank of England meets on Thursday, unlikely to signal rate cuts. Reserve Bank of Australia could maintain a higher-for-longer stance. Elsewhere, Bank of Japan releases summary of opinions.