Dollar Hits Fresh 2018 Highs

The dollar hit new 2018 highs yesterday. Final Euro CPI and US data are in focus today.

Previous Day's Market Highlights

The dollar saw a bid tone yesterday, hitting new 2018 highs against the pound and the euro. Sterling-dollar fell back below 1.35, briefly dipping below January’s low of 1.3458. Euro-dollar fell towards 1.18. Dollar strength was supported in part by the Retail Sales release, which saw decent if under-forecast growth in April and upwards revisions to previous prints. The softer euro enabled sterling-euro to test the 1.14 level.
 
As for the day’s other data, German Q1 GDP slowed more than expected, while Eurozone GDP was unrevised from preliminary estimates. UK Labour Market data were largely as expected: Average Earnings slowed to 2.6% excluding bonuses but rose to 2.9% including them, and the Unemployment Rate was steady in March at 4.2%. However, Claimant Count Change rose more than expected in April.
 
The Aussie weakened overnight as quarterly wage growth was slower than expected, with the index up only 0.5% versus the 0.6% projected and seen in the previous quarter. This briefly enabled sterling-Aussie to test the 1.81 level.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1407 1.1569 1.1302 2.31%
GBP/USD 1.3505 1.4315 1.3451 6.04%
EUR/USD 1.1841 1.2400 1.1815 4.72%
GBP/AUD 1.8049 1.8476 1.7909 3.07%
GBP/NZD 1.9627 1.9755 1.9247 2.57%
GBP/CAD 1.7366 1.7999 1.7224 4.31%

Today's Market Highlights

Final estimates of April Eurozone CPI are expected to confirm a slowdown to 1.2% in headline inflation and 0.7% in core inflation (10:00 BST), which may have limited impact or weigh slightly on the euroECB President Draghi will give the welcome address in honour of Vítor Constâncio, which may have little market impact unless there are any monetary policy hints.
 
Increases in Industrial Production and Capacity Utilization could support the dollar this afternoon (14:15).

Today's Economic Calendar

Time Currency Release Consensus Previous
10:00 EUR CPI YoY (Apr) 1.2% 1.2%
10:00 EUR Core CPI YoY (Apr) 0.7% 0.7%
13:00 EUR ECB President Draghi
13:30 USD Housing Starts MoM (Apr) 1.310M 1.319M
13:30 USD Building Permits MoM (Apr) 1.350M 1.354M
13:30 USD Fed's Bostic Speaks
13:30 EUR ECB's Coeure Speaks
14:15 USD Industrial Production MoM (Apr) 0.6% 0.5%
14:15 USD Capacity Utilization (Apr) 78.4% 78.0%
15:30 USD EIA Crude Oil Inventories (11 May) -0.763M -2.197M
15:30 EUR ECB's Praet Speaks
17:00 CAD BoC Schembri Speaks
23:30 USD Fed's Bullard Speaks
23:45 NZD Producer Price Index - Input QoQ (Q1) 0.3% 2.1%
02:00 AUD Consumer Inflation Expectation (May) 3.6%
02:30 AUD Unemployment Rate s.a. (Apr) 5.5% 5.5%
02:30 AUD Employment Change s.a. (Apr) 20.0K 4.9K
03:00 NZD Budget Release

Caxton