GBP: Sterling edges off after US CPI
EUR: Remains in the background with no data to report and Ascension Day today
USD: Dollar in today’s spotlight, after CPI rises
Sterling enjoyed its head in the sky as it held most of its gains through yesterday’s early trading session. Preliminary GDP figures came in slightly better than the expected, however this left minimal effect. Towards the end of the day, we saw a USD fight back after its inflation figures were released, giving the pound a knock lower. Andrew Bailey is speaking today, he could follow in the FED’s footsteps and confirm that the central bank is also in no hurry to raise interest rates.
Little to no data came from within the Eurozone yesterday, however the inflation outlook is set to remain subdued. The economic forecast released yesterday, projects that inflation within the EEA is set to increase from 0.3% in 2020 to 1.4% in 2021. As expected, the market largely overlooks this release with eyes focussed on US inflation data instead. We have no data due for today, and it is Ascension Day meaning some European countries will not be able to receive funds today.
As explained above, inflation figures gave the dollar a boost resulting in 0.8% m/m against the expected 0.2%. The figures spooked US stocks lower and treasury yields higher as consumer prices rose by the most in nearly 12 years, encouraging bets on earlier interest rate hikes. Unemployment claims are due at 13:30 and FOMC member Waller, speaks at 18:00. The dollar will continue to be in the spotlight today as the producer price report for April will provide some further insight into the inflation outlook.
A combination of higher commodity prices and supply chain concerns are leading to the influx in consumer prices. With the lack of demand and high shipping costs, this has also continued to weaken some commodity currencies (AUD, NOK, NZD). One central bank has split from the pack, as the central bank of Canada started to cut back its asset purchases. BoC Governor Macklem speaks today.
Today’s interbank rates at 09:20 against sterling. Movement vs yesterday.
|US dollar||$1.405 ↓|
|Australian dollar||$1.822 ↑|
|South African rand||R19.803 ↑|
|Japanese yen||¥153.7 ↑|
Have a great day.