The US dollar regained ground against its forex peers as risk aversion returned to the financial markets. Data from the US economy was slightly weaker than expected as the initial jobless claims landed at 266K versus the 261K forecast. The US advanced GDP reading is due today and a 2.6% figure is eyed, indicating a much faster pace of growth compared to the 1.1% expansion in the first quarter. 


The euro suffered a sharp drop against its forex peers as new signs of uncertainty popped up in the euro zone. In Spain, the King asked Prime Minister Rajoy to hold a vote of confidence after the past elections failed to produce a majority government. In Italy, a group of large banks and lenders rejected the proposal to provide a cash injection for the country’s third largest bank, putting downside pressure on the financial sector. Data from the euro zone, namely German CPI and unemployment change, came in stronger than expected. German retail sales, French consumer spending, Spanish flash CPI and GDP are due today. The region’s flash CPI readings are also up for release.


The pound moved mostly sideways in recent trading sessions as UK data came in mixed. Nationwide HPI showed a larger than expected gain in house prices while the GfK consumer confidence index slumped from -9 to -12 instead of improving to the projected -7 figure. Net lending to individuals and mortgage approvals data are due today.


The franc regained ground across the board, scoring large gains to the dollar and euro. There were no major reports out of the Swiss economy yesterday and none are due today, which suggests that market sentiment in the region was likely responsible for the flight to safety.


The yen had a bout of volatility as traders anticipated the BOJ decision. Earlier in the day, the latest batch of Japanese economic reports printed mixed results so there’s room for additional easing but the question is at what amount. An aggressive stimulus program could mean losses for the Japanese currency while a conservative figure could still keep it afloat. Household spending and retail sales both missed forecasts while inflation readings came in close to consensus.

Commodity Currencies (AUD, NZD, CAD)

The comdolls managed to hold on to some of their gains despite the bout of risk aversion yesterday, as the uncertainties were mostly concentrated in the European region. New Zealand’s ANZ business confidence index fell from 20.2 to 16.0, indicating weaker optimism. Australia’s quarterly PPI is due next and a 0.2% rebound is eyed. Canada will be releasing its monthly GDP reading and a 0.5% contraction is expected. 

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