USD

Today’s preliminary US Q1 GDP figures are likely to dominate market attention. Markets expect growth to reach 2% over the period, down from 2.6%. On the positive side, big tech companies continue to beat Q1 earnings estimates. Meta was the latest company to do so after the close yesterday, with strong ad revenue helping to lift the bottom line. However, broader stocks are stuttering, with ongoing worries over the future of First Republic dampening sentiment. This has helped to drive safe havens, such as Gold, higher. The dollar is also struggling to maintain any upside bias, with the dollar index (DXY) losing around 0.5% over the past two days. Markets appear to be looking beyond next week’s probable 25bps Fed rate hike, which looks to be a drag on the dollar.  

EUR

For a time yesterday, the single currency dominated on broadly stronger market sentiment. Indeed, EUR/USD even managed to climb to a new 2023 high for a short while. However, markets turned sour in the US afternoon, taking the single currency down with it. GBP/EUR is slightly different, and here the single currency has maintained recent gains, rising by over 0.25% since Monday.  

GBP

Signs of increasing stress among UK consumers continue to emerge. The latest data has confirmed that around 40% of all 35-44-year-olds are now resorting to borrowing to make ends meet every month. The big impact to their cost of living and ongoing double-digit inflation is the driver here. This will give the BoE further food for thought as they contemplate ongoing UK rate hikes. GBP/USD remains upbeat, however, rising by around 0.4% since the beginning of this week. 

JPY

It is a big day for Japan tomorrow, with the latest Tokyo inflation report set to confirm further moderation, followed by Ueda’s first BoJ policy meeting as governor. Headline inflation is expected to have declined from 3.3% to 2.6%. That outcome would please the BoJ, who are scheduled to conclude their policy meeting a few hours later. Markets do not expect Ueda to make any immediate changes the BoJ’s YCC policy. The yen also pared recent gains, with EUR/JPY surging by around 0.7% on the day. USD/JPY was more rangebound.  

CAD

A modest rebound in crude oil prices has helped to mitigate the recent Loonie losses. Oil has previously declined to a fresh monthly low, mainly driven by an increase in Russian exports. USD/CAD is still up over 0.75% this week, however, with the greenback still dominating. With no Canadian major economic data releases scheduled this week, the pair will likely take its directional bias from broader greenback moves.  

MXN

USD/MXN has extended its recent rally after failing to break below recent cycle lows. Indeed, the pair is approaching a two-week top and has risen by over 0.5% since the beginning of this week. 

BRL

USD/BRL remains in a tight trading range, highlighted by the pair failing to move more than 0.1% in either direction over the past two days. Regular observers of USD/BRL will note that ranges do not tend to remain this tight for long, so a breakout is likely.