USD Softens Again

USD softened yesterday on Tillerson headlines and CPI, and remains in focus with Retail Sales out this afternoon.

Previous Day's Market Highlights

The dollar came under pressure as inflation rose only in-line with expectations and the White House announced the departure of Rex Tillerson as Secretary of State, adding to uncertainty. The Canadian dollar also weakened as BoC Governor Poloz said higher inflation might not be needed for additional growth and that the Bank would remain cautious on adjusting policy. The pound firmed during Chancellor Hammond’s Spring Statement, which highlighted smaller budget deficit and higher 2018 growth forecasts.
 
These movements saw cable rally above 1.39, although it couldn’t quite regain the 1.40 psychological barrier, a level it last broke on 25 February. Against the euro, the pound again met resistance around 1.13, while sterling regained 1.77 against the Aussie, 1.90 against the kiwi, and 1.80 against the Canadian dollarEuro-dollar moved higher to breach 1.24.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1267 1.1399 1.1150 2.18%
GBP/USD 1.3960 1.4150 1.3711 3.10%
EUR/USD 1.2389 1.2556 1.2154 3.20%
GBP/AUD 1.7713 1.7913 1.7603 1.73%
GBP/NZD 1.9047 1.9280 1.8925 1.84%
GBP/CAD 1.8085 1.8131 1.7413 3.96%

Today's Market Highlights

This morning, both ECB President Draghi and the ECB’s Praet have struck cautious tones on inflation, coinciding with a slightly softer euro against both the firmer dollar and the pound this morning. Traders will keep an eye on additional speakers throughout the day, with comments closely watched following last week’s meeting, at which the ECB removed its easing bias from the policy statement.
 
US Retail Sales will keep the dollar in focus in the afternoon (12:30 GMT), with an expected pick up after January’s decline. This could strengthen the dollar, although any additional political surprises could be the greater driver, likely to the downside given heightened uncertainty.
 
Overnight, faster quarterly GDP growth could see a stronger kiwi dollar.

Today's Economic Calendar

Time Currency Release Consensus Previous
10:00 EUR Industrial Production w.d.a. YoY (Jan) 4.7% 5.2%
10:45 EUR ECB VP Constancio Speaks
12:30 USD Retail Sales MoM (Mar) 0.3% -0.3%
12:30 USD Core Retail Sales MoM (Mar) 0.4% 0.0%
14:30 USD EIA Crude Oil Inventories (9 Mar) 1.500M 2.408M
16:15 EUR ECB's Coeure Speaks
21:45 NZD GDP QoQ (Q4) 0.7% 0.6%
21:45 NZD GDP YoY (Q4) 3.1% 2.7%
00:00 AUD Consumer Inflation Expectations (Mar) 3.6%

Caxton