Pound Sterling (GBP)
The Pound is weakening below opening levels versus most of the major currencies today. The latest inflation data has painted a bit of a mixed picture; overall price growth held at 2.3% – its highest level since September 2013 – while core price growth has slowed more-than expected to 1.8%. Inflation is giving investors something of a headache at the moment, which is keeping the Pound lacklustre. On the one hand, markets want to see strong inflation, as this makes it more likely the Bank of England (BoE) will hike interest rates. But the BoE seems unlikely to do so just now and rising price growth weakens the UK’s vital consumer spending.
US Dollar (USD)
Yesterday’s speech from Janet Yellen was largely a disappointment. The Chair of the Federal Reserve said that the central bank was changing its focus to allowing the economy to ‘kind of coast’ instead of ‘trying to give the economy all the oomph we possibly could’. This suggests that further adjustments to monetary policy will remain gradual, indicating that hopes of three additional rate hikes this year could be overly optimistic. Additionally, Yellen claimed that any economic stimulus measures enacted by President Donald Trump would not have an impact until next year, again lowering expectations of aggressive monetary tightening.
New fears over the outcome of the French presidential elections have kept the Euro soft recently after leftist contender Jean-Luc Melenchon has emerged as a strong fourth contender. Melenchon is seen as a threat because his leftist stance could provide more central voters with an alternative to far-right Marine Le Pen, yet one of his core policies is a referendum on EU membership. Previously, centrist Emmanuel Macron was expected to beat Le Pen, but Melenchon’s late rise in support has shaken investor confidence. The Euro is largely – if only marginally – in positive territory today, however, after the latest German ZEW economic sentiment index rose to an unexpectedly-high 80.1.
Australian Dollar (AUD)
Mixed domestic data is keeping the Australian Dollar on an uneven footing today, with even positive movements failing to stray far above opening levels. The latest weekly consumer confidence index has shown a strong rise from 111.1 to 114.8, while the NAB business conditions index has climbed from 9 to 14. However, the headline NAB business confidence index has edged lower from 7 to 6. Given that investors aren’t in much of a risky mood at the moment anyway – what with the US involvement in Syria and tensions surrounding North Korea – it is perhaps unsurprising that the Australian Dollar is in low demand today.
New Zealand Dollar (NZD)
Just like the Australian Dollar, the New Zealand Dollar is also struggling today due to the geopolitical concerns keeping investors away from risky assets. Where the Australian Dollar has found some support, however, the New Zealand Dollar has none and is firmly in negative territory against its peers. Last night’s card spending figures were mixed, showing a -0.3% decline in spending on retail during March, but growth of 0.5% more generally.
Canadian Dollar (CAD)
Yesterday’s strong housing starts figure continues to provide the Canadian Dollar with a little support, but overall CAD is struggling along with its commodity peers. The building data for March showed a much-higher-than-expected 253,700 new projects, against predictions of 214,500. Prices of crude oil – Canada’s key export – strengthened to five-week highs in recent days, but are now edging down on news that production of US shale oil is on the rise.