Australian Dollar (AUD) Under Pressure in Spite of Solid Building Permits
The Australian Dollar (AUD) slid lower across the board in spite of another solid month of building permits data.
Although building permits still demonstrated a solid increase on the month in March, investors were a little disappointed to see the pace of growth slow from the previous month. The mood towards the ‘Aussie’ soured further overnight thanks to a stronger-than-expected US inflation reading and a surge in market risk aversion.
Even so, with forecasts pointing towards an uptick in consumer inflation expectations, the appeal of the Australian Dollar could improve this morning.
Pound (GBP) Rallies Thanks to Improved Monthly UK Growth Rate
The Pound (GBP) rallied as March’s monthly GDP reading bettered forecasts.
As the monthly growth rate picked up from 0.7% to 2.1% at the end of the first quarter, this bolstered hopes of a greater economic recovery to come. Even though the quarterly growth rate still showed a sharp contraction, this was not enough to weigh GBP exchange rates down.
However, the appeal of the Pound could weaken tonight thanks to fresh commentary from Bank of England (BoE) Governor Andrew Bailey.
Euro (EUR) Falters on Weaker Eurozone Industrial Production
The Euro (EUR) slipped as March’s set of Eurozone industrial production data failed to strengthen as far as anticipated.
Investors were disappointed to find that production had picked up just 0.1% on the month in March, an improvement that pales in comparison to February’s sharp -1.2% contraction. This weaker uptick suggests that the manufacturing sector remained under a major degree of pressure at the end of the first quarter, leaving the single currency on the back foot.
Anticipation ahead of the release of the European Central Bank’s (ECB) most recent set of meeting minutes tomorrow could keep the Euro under pressure today.
US Dollar (USD) Strengthens Following Inflation Data
The US Dollar (USD) pushed higher across the board last night as April’s set of inflation figures proved much higher than expected.
As the headline inflation rate jumped from 2.6% to 4.2% on the year, US Treasury yields rose as a result and lifted USD exchange rates. However, this sharp increase is unlikely to be enough to give the Federal Reserve incentive to tighten monetary policy in the months ahead.
If tonight’s initial jobless claims figure falls short of forecast, the US Dollar could give up some of these gains.
Canadian Dollar (CAD) Buoyed by Surge in Oil Markets
The Canadian Dollar (CAD) picked up as oil markets staged a fresh rally, shaking off the wider deterioration in market risk appetite.
Oil prices jumped on the day’s opening levels in the wake of the American Petroleum Institute’s (API) latest inventories figure. As crude oil inventories saw another sharp draw on the week, with stockpiles declining by 2.533 million barrels, this gave the commodity-correlated Canadian Dollar a leg up against its rivals.
A solid increase in April’s producer price index data could help to push CAD exchange rates higher still this evening.
New Zealand Dollar (NZD) Slides Ahead of Food Inflation Reading
The New Zealand Dollar (NZD) found itself lacking in support in the continued absence of any fresh domestic data releases.
Without the support of any New Zealand economic data, and with market sentiment souring, there was little room for the New Zealand Dollar to strengthen on Wednesday. As the US Dollar returned to a stronger footing across the board, this added to the vulnerability of the ‘Kiwi’.
As forecasts point towards the food inflation figure turning negative in April NZD exchange rates could shed further ground over the course of the day.
Data Releases
08:45 NZD Food Inflation (Apr) -0.5%
11:00 AUD Consumer Inflation Expectations (May) 3.7%
22:30 CAD Producer Price Index (Apr)
22:30 USD Initial Jobless Claims (08/May) 490,000