Euro Slides as Eurozone Economy Falls Back into Recession

Australian Dollar (AUD) Muted as Producer Price Index Disappoints

The Australian Dollar (AUD) remained under pressure ahead of the weekend thanks to disappointing producer price index data, which fell short of forecast on both the quarter and year.

Private sector credit growth also faltered on the year, clocking in at 1% rather than the 1.8% increase investors had anticipated. All in all, this left the antipodean currency on a weaker footing.

However, if April’s finalised manufacturing PMI confirms a sharp uptick in momentum, this could help AUD exchange rates recover some ground.

Pound (GBP) Slips as UK R Number Rises

The Pound (GBP) struggled at the end of last week’s session, as end of month trade position adjustment and ongoing speculation surrounding Prime Minister Boris Johnson weigh on Sterling.

GBP investors also became more cautious following news that the UK’s coronavirus R number had increased slightly as restrictions are eased.

Looking ahead, support for the Pound is likely to remain limited thanks to the May Day bank holiday tonight before significant data releases and the Bank of England interest rate decision later in the week.

Euro (EUR) Dented as Eurozone Returns to Recession

The Euro (EUR) slipped lower against many of the majors as the first quarter German GDP reading proved weaker than anticipated, slumping to -1.7%.

The single currency weakened further in response to the first quarter Eurozone growth rate, which showed a second consecutive quarter of contraction and pushed the currency union back into a double-dip recession.

Even so, if German retail sales continue to demonstrate solid growth this may help to shore up EUR exchange rates this evening.

US Dollar (USD) Lifted as Personal Income Leaps

The US Dollar (USD) pushed higher across the board during Friday’s European session thanks to a sharp increase in the latest personal income figure.

A 21.1% jump in income on the month bolstered the US Dollar, even though the increase was largely thanks to the latest round of stimulus checks. Nevertheless, with markets betting on the prospect of increased consumer spending to come, USD exchange rates extended their uptrend.

Another strong performance from April’s ISM manufacturing PMI could give the US Dollar an additional boost overnight.

Canadian Dollar (CAD) Benefits even as GDP Slows

The Canadian Dollar (CAD) recovered ground even as February’s GDP figure fell short of forecast, with the growth rate slowing from 0.7% to 0.4% on the month.

With the Canadian economy still demonstrating positive growth momentum, CAD exchange rates were able to gain some traction, even though worries over the outlook remained.

However, with April’s manufacturing PMI expected to show a modest slowdown on the month, the Canadian Dollar could face some selling pressure tonight.

New Zealand Dollar (NZD) Weighed Down Despite Consumer Confidence Uptick

The New Zealand Dollar (NZD) failed to capitalise on the latest improvement in the ANZ Roy Morgan consumer confidence index.

Even though the index rose from 110.8 to 115.4 in April, the New Zealand Dollar remained under pressure as a result of developments in wider market sentiment. With confidence in the health of the US economy growing once again, the appeal of the risk-sensitive ‘Kiwi’ generally diminished.

Without the support of any fresh data the New Zealand Dollar is unlikely to find any particular rallying point today.

Data Releases

08:30 AUD Manufacturing PMI (Apr) 59.6
16:00 EUR Germany Retail Sales (Mar) 3.2%
23:30 CAD Manufacturing PMI (Apr) 56
00:00 USD ISM Manufacturing PMI (Apr) 64.9

Louisa Heath

louisa.heath@torfx.com


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