Canadian Dollar Leaps Higher as Bank of Canada Confidence Grows

Australian Dollar (AUD) Supported by Retail Sales Rebound

The Australian Dollar (AUD) found support as March’s retail sales data showed a solid rebound on the month, with growth bettering forecasts by jumping 1.4% last month to reverse much of February’s -0.8% decline.

With consumer confidence appearing to have improved at the end of the first quarter, the mood towards the Australian Dollar picked up, especially in the face of a general increase in market risk appetite.

Without the support of any fresh domestic data releases, though, the ‘Aussie’ may struggle to hold onto a positive footing in the near term.

Pound (GBP) Slides Even as UK Inflation Rises

The Pound (GBP) stumbled against many of the majors even as the UK inflation rate showed an uptick on both the month and the year during yesterday’s European session.

As the headline inflation rate failed to pick up quite as far as forecast, this limited the data’s impact on GBP exchange rates. With the Bank of England (BoE) still looking likely to keep monetary policy on hold for the foreseeable future, regardless of a modest uptick in inflation, investors saw little reason to favour the Pound.

With forecasts pointing towards an improvement in the second quarter CBI business optimism index, the Pound could find fresh traction this evening.

Euro (EUR) Under Pressure Ahead of ECB Policy Meeting

The Euro (EUR) fell largely out of favour during Wednesday’s European session as anticipation for the European Central Bank (ECB) policy meeting continued to grow.

With markets expecting to see a fresh display of dovishness from policymakers at tonight’s announcement, the potential for single currency gains proved lacking.

Unless the ECB proves more confident in nature at its April policy announcement, the Euro looks vulnerable to further losses.

US Dollar (USD) Limited as Safe-Haven Demand Dips

The US Dollar (USD) struggled yesterday as market sentiment improved at the start of the US session, which weighed on safe-haven USD demand.

Despite rising global coronavirus cases, equity markets pushed higher and risk appetite increased modestly as investors appeared to shake-off Covid-19 related concerns.

USD exchange rates could come under pressure this evening as initial jobless claims data for last week is expected to have risen to 617,000, up from the previous week’s 576,000.

Canadian Dollar (CAD) Leaps Thanks to Bank of Canada Confidence

The Canadian Dollar (CAD) rallied sharply in response to the latest commentary from Bank of Canada (BoC) policymakers.

CAD exchange rates pushed higher across the board in the wake of the BoC’s April policy meeting, which saw the central bank paring back its bond purchases and taking a more positive view on the economic outlook. With policymakers also indicating that interest rates could come sooner than previously anticipated, the appeal of the Canadian Dollar strengthened.

Another positive month of new housing price index growth may also offer support to the Canadian Dollar tonight.

New Zealand Dollar (NZD) Benefits from Rising Inflation Rate

The New Zealand Dollar (NZD) capitalised on a stronger-than-expected uptick in the first quarter inflation rate.

While forecasts had suggested an increase in inflationary pressure, the uptick from 0.5% to 0.8% on the quarter gave NZD exchange rates a decent leg up. Even though the inflation rate remains some way short of the Reserve Bank of New Zealand’s (RBNZ) target, this increase still gave the ‘Kiwi’ cause for confidence for the time being.

If market risk appetite starts to falter once again, though, the New Zealand Dollar may struggle to avoid shedding some of its gains.

Data Releases

20:00 GBP CBI Business Optimism Index (Q2) -10
21:45 EUR European Central Bank Rate Decision 0%
22:30 CAD New Housing Price Index (Mar) 1.4%
22:30 USD Initial Jobless Claims 617,000

Louisa Heath