Daily Market Pulse

USD

Strong earnings among Big Tech companies have helped drive further stock gains. The rally in the S&P 500 yesterday was the strongest since the beginning of January. Aiding the rally were the latest (Q1) US growth figures, which missed estimates at 1.1% versus the 2% expected. Pending home sales also disappointed and have fallen by over 23% during the past year. Key US Core Personal Consumption Expenditures (PCE) Price Index are also expected to moderate later, which should please the Fed, as we near an expected pause in US rate hikes. The dollar has also pushed higher today, with the key dollar index (DXY) rising over 0.5%.  

EUR

The Euro area marginally missed a recession during the first quarter, with regional growth rising by 0.1%, against an expected 0.2% gain. Both France and Italy saw growth bounce back strongly, with Germany stagnating and Spain posting marginal gains. Unfortunately, there was not such good news on inflation, with CPI accelerating in France and Spain. The news will raise expectations for future ECB rate hikes, with another 25bps forecast for next week. EUR/USD is fairly flat on the week after paring recent gains.   

GBP

Aside from the latest public sector borrowing data, there has been a lack of keynote releases this week to drive the pound. However, GBP/USD has maintained its recent rally, rising by 0.35% since Monday. GBP/EUR has also rallied by the same level, with most of that move coming earlier today after the Euro decline (see EUR). UK data is dominated by the latest unemployment data next week. 

JPY

Dovish remarks from BoJ governor Ueda after his inaugural policy meeting have seen significant declines for the Yen overnight. Ueda suggested that it will be appropriate to continue monetary easing to achieve the 2% inflation target. However, Ueda did announce a policy review. With the BoJ making no significant changes to their ultra-loose policy settings or tweaks to their disputed YCC policy, Yen bulls have made for the doors. USD/JPY has rallied by over 1.5% today, accelerated by a stronger dollar. EUR/JPY is around 1.1% higher, with the Yen declining. Interestingly, the latest Tokyo Inflation report, which was also released overnight, saw unexpected gains in both headline and core inflation. This should help to keep the pressure on the BoJ.  

CAD

With the recent rally in oil faltering overnight, the Loonie has reversed previous day’s gains. Front-month Crude has now declined by a whopping 9% during the past two weeks. USD/CAD rallied by a more modest 2.2% over the same period. The latest Canadian growth figures will be released later today and are expected to have moderated over the past month, having risen by 0.3% previously. 

MXN

Exports in Mexico hit a record high of $53.6bn during March, which helped Mexico post a trade surplus. Over 95% of those exports were driven by non-oil exports, including manufactured goods. Mexico is also clearly benefitting from the manufacture and sale of goods to the US, with over 83% of non-oil exports going to the US. The news has helped to drive a recovery for the Peso, with USD/MXN now flat on the week after eliminating previous dollar gains. 

BRL

The Real has clawed back much of last week’s losses against the dollar, with USD/BRL losing around 1.75% over the week, having rallied by nearly 3% last week.