Tag Archives: USD

As expected, the ECB maintained its monetary stance yesterday. However, the meeting statement underlined that if the ECB’s updated assessment of the inflation outlook offers it more confidence that underlying inflation is approaching its 2% target. 

President Lagarde stated, that the ECB is not “pre-committing to a particular rate path.”. However, the impact of the ECB meeting on market rate expectations was somewhat muted.

The British Pound was broadly supported after the ONS said the UK economy grew in February and revised its initial estimate for January’s growth earlier this morning.

The pound to euro exchange rate rebounded to the 1.17 level after it was revealed that the UK economy gained 0.1% month on month in February, with January’s number revised up to 0.3% from 0.2%.

Pound to Dollar exchange rate remains weak in the face of the larger U.S. dollar surge that has driven FX activity since the release of positive U.S. labour market and inflation statistics yesterday.

Looking ahead to today, the main highlight will be the preliminary reading of US consumer sentiment for April. Barring any major surprises, though, the data is unlikely to affect the dollar.

The European Central Bank will today announce their latest Interest rate decisions. It is widely expected that they will hold at 4.5% for another month. Although as inflation falls across the eurozone, markets are pricing in the first rate cut for June.

Following the interest rate announcement, investors will be keen to tune into the press conference to see what comments are made regarding rate cuts.

Later this afternoon sees the release of the US Employment figures. Unemployment Claims are expected to fall to 215k (from last week’s 221k).

Alongside this Producer Price Index is another key release for the US today, with Core PPI forecasted to come in on the upside at 2.2% (from 1.6%).

Looking ahead this week, the UK publishes its Growth Domestic Product. It is expected to come in at 0% month on month. This will be released in concurrently with Industrial Production, with markets expecting to see growth in the manufacturing sector.

On the currency front, the pound had a dreadful day against the dollar yesterday falling a total of 140 points off the back of the US inflation data.

For the pound to euro rate there has been no movement of interest. Currently sitting around the yearly average. However, this will likely be volatile this afternoon with today’s releases.

Today will be dictated by a flow of US data later this afternoon.

Todays US March CPI report will be closely watched by markets and will be play a key role on future interest rate cuts.

It is expected that core inflation will ease to 0.3 percent for the month, allowing the annual rate to drop to 3.7 percent from 3.8 percent.

There has been an expectation of late that we could see the US cut interest rates as soon as June and is now priced in as a 50/50 probability. The new expectations come on the back of last week’s stronger than expected employment report.

Later this evening, the minutes of the March Fed policy meeting will be released, and again markets will look for any clues on future interest rate projections.

There is no UK or EU data today, therefore attention will solely be on the US data.

Focus does shift to the EU interest rate announcement tomorrow where it is expected that the headline rate will be left at 4.5 percent.

PPI US data will be released later in the afternoon. To cap off the week, we have the UK Growth figures and Industrial Production numbers released on Friday.  

On the monetary policy front, the ECB’s monetary policy meeting summary found a balance, yet it lacked any new information. The minutes stated that the case for considering rate cuts was strengthening, but also highlighted concerns about service inflation.

However, it additionally said that the ECB will have “significantly more data and information by the June meeting,” implying that a first-rate decrease may be required then. Regardless, the minutes had no substantial effect on market rates yesterday.

Similarly, remarks by several Fed officials had no significant impact on trading conditions, as currency markets remained range bound. Of the limited price activity that occurred, the dollar remained under some minor weakness throughout the European trading day until recovering from a dip overnight.

Looking ahead today, Nonfarm Payrolls data is likely to reveal that the US economy generated 200,000 jobs last month, down from the 275,000-gain recorded in February. January’s figure was notably lower, showing 229,000 employment added rather than 353,000 as first reported.

The unemployment rate will likely stay at 3.9%. Meanwhile, Average Hourly Earnings, a major indicator of wage inflation, is expected to rise 4.1% for March, a slight decrease from February’s 4.3% growth.