The dollar scored another winning day thanks to higher US bond yields. Optimistic remarks from Fed officials, along with improved sentiment from the Beige Book, revived rate hike expectations even as some medium-tier reports previously missed expectations. Initial jobless claims and the Philly Fed index are due next.
The euro struggled to hold its ground as ECB tightening hopes dipped on the downgrade in final headline CPI. The figure was lowered from 1.4% to 1.3% instead of being unchanged as expected. There are no major reports due from the region today so the shared currency could be more sensitive to risk flows and its counterparts’ movements.
The pound took a hit when UK CPI disappointed, following through on the reaction from the weaker average earnings index earlier in the week. The headline figure fell from 2.7% to 2.5% instead of holding steady while the core figure dipped from 2.4% to 2.3%. UK retail sales is due next and a 0.5% drop in consumer spending is eyed.
The franc continued to slide lower as traders renewed their demand for the dollar versus other lower-yielding currencies. The improvement in risk appetite also took its toll on the Swiss currency. There were no reports out of Switzerland then and none are due today, so sentiment could remain in play.
The yen was also in a weak spot as dollar demand picked up on account of higher US bond yields. There were no reports out of Japan then and none are due today, so sentiment could push yen pairs around.
Commodity Currencies (AUD, NZD, CAD)
The Loonie slumped hard after the BOC was considerably less upbeat than expected. The central bank kept rates unchanged at 1.25% but did not signal any eagerness to hike again anytime soon, citing trade risks as a source of uncertainty. In Australia, the headline unemployment change came in weaker than expected at 4.9K versus 20.3K for March while the earlier reading was downgraded to -6.3K. There are no major reports due from the comdoll economies in the next sessions.