USD

It is another big week for US data, although none of it is likely to derail the Fed. Markets expect a 25bps hike from next week’s meeting, with a 90% probability* currently priced into markets. However, it would probably require a significant drop in US growth or an even bigger decline in inflation and wages to impact market thinking. On the inflation front, the Fed’s favored Core CPE Price Index is likely to remain stubbornly high, although Headline yearly CPE is expected to have dropped substantially. Wages are also likely to have remained elevated when the latest employment cost index is released. The dollar remains fairly restrained, with the index around 0.2% lower today. 

*Source: CME Markets 

EUR

EUR/USD is marching towards the recent high and has rallied by over 0.5% over the past few days, albeit in fairly small advances. The data showed a rather mixed outlook to the latest European PMI surveys. German Services beat estimates but missed on Manufacturing. It was a similar picture amongst the regional data, as business activity stuttered. There was also a mixed outcome from the latest German IFO survey, with a weaker Business Climate and Current Assessment offset by a worthy jump among expectations. 

GBP

Recent UK economic data has largely disappointed of late. Persistently high core inflation remains a concern for the BoE. However, analysts remain optimistic that sharp declines could be imminent. UK consumers also look to be reacting to the significant increases in their cost of living, with sentiment and Retail Sales declining. As a result, GBP/USD is largely rangebound, with GBP/EUR losing around 0.2%, as the single currency outpaces the pound. 

JPY

The Yen has continued its previous decline profile, despite recent Japanese inflation surging. Markets do not expect any change of direction from the BoJ, which is helping to aid the Yen’s decline. USD/JPY has rallied by over 0.4% today, with EUR/JPY slightly stronger on the session. Key Tokyo inflation data will now gain extra market attention, given the stronger regional data of late. 

CAD

The latest Canadian Retail Sales data highlighted a milder 0.2% dip during February, with another 1.4% decline expected during March. The decline during February was somewhat shallower than the 0.6% predicted. However, the news highlights the negative impact on consumer spending habits caused by the previous cumulative BoC rate hikes. USD/CAD rallied by over 1.3% last week as the Loonie struggled. 

MXN

For the Peso bulls, USD/MXN remains tantalizingly close to the recent low (Peso high). However, the dollar has remained firm. Despite some interesting intra-day moves, the pair also finished the week at almost the exact level it began. That may give the Peso bulls further confidence. 

BRL

After rallying for four straight weeks, the Real had a tough time throughout last week. USD/BRL rallied by over 3% at one point, with the dollar finding some serious support after moving close to a yearly low.

CNY

USD/CNY rallied by around 0.5% last week as the dollar dominated proceedings. The move was all the more noteworthy, given largely stronger Chinese data, with growth surging during Q1.