USD

The Dollar remains just below its five-week high this morning as April Retail sales numbers showed an increase of just 0.4% against expectations of a 0.7% rise. However, the control group figure beat expectations, while the ex-Autos number fell in line with forecasts. As traders mull the data, several Fed officials are set to speak over the course of the day as markets look for hints about the future path of US interest rates. Finally, investors worldwide remain focused on the US government’s potential debt ceiling issues, with a meeting between President Biden and top Congressional leaders set to occur later today. 

EUR

The Euro began the morning in the green despite sour economic sentiment data out of Europe and has since shifted in and out of positive territory after the release of US retail sales numbers. Earlier today, the May ZEW Indicator of Economic Sentiment for Germany dropped to -10.7, its lowest level in five months, indicating a significant decline compared to market expectations. The report also mentioned, “Financial market experts anticipate a worsening of the already unfavorable economic situation in the next six months. As a result, the German economy could slip into a recession, albeit a mild one.” The same indicator for the entire Eurozone also fell back into the red, posting its worst figure since December 2022. 

Finally, The Eurozone’s GDP release confirmed that the economy grew modestly at 0.1% in Q1, following a stagnant Q4.

GBP

It has been a volatile morning for the Pound. After an initial drop on the heels of UK employment data, GBP rebounded slightly into positive territory ahead of US retail sales. However, GBP/USD has returned to the red as markets remain choppy on the day. In Q1, the UK unemployment rate increased slightly to 3.9%, reaching its highest level since late 2021 and early 2022. However, the number of people employed grew by 182,000, surpassing market expectations, with both full-time and part-time self-employment rising. 

Additionally, average weekly earnings, including bonuses, remained stable at a year-on-year growth rate of 5.8% during the same period, aligning with market forecasts.

JPY

After three days of declines, the Japanese Yen is down again against the Dollar as markets absorb the recent release of weaker-than-expected US retail sales data while bracing for GDP data out of Japan later this evening. Market forecasts point to modest growth of 0.1% in Q1 for the Japanese economy after remaining stagnant in Q4. From a year-on-year perspective, expectations are for a Q1 growth rate of 0.7%, which would be a step up from the previous read of 0.1%.

CAD

After closing yesterday up 0.67%, the Loonie is primarily unchanged this morning as traders digest the array of US and Canadian data released this morning. 

Canadian inflation surprisingly jumped in April, with the annual inflation rate rising to 4.4% from the previous month’s 19-month low of 4.3% - ending a 10-month run of softening inflation. 

Higher rent and mortgage prices and increased recreational goods and services costs primarily drove the rise in consumer prices. Meanwhile, Canadian manufacturing sales rose 0.7% month-on-month in March, matching expectations and marking a significant reversal from the February drop of 3.6%.

MXN

The Mexican Peso began the day on the back foot after surging nearly 1% higher against the Dollar yesterday, reaching its highest level in seven years. MXN’s leap of almost 11% over the last year leaves it as the top-performing currency against the Dollar in that time – partly attributed to the macro picture in Mexico and partly due to the long-run downtrend in the Greenback since Q3 of 2022. In the aftermath of US retail sales data, USD/MXN is up nearly 0.4% as Thursday’s Banxico decision looms.

BRL

BRL’s hot run of gains over the last week stalled this morning in the aftermath of US retail sales data. Despite the pullback, the Brazilian Real is trading around four-week highs and is up over 7% against the Dollar this year. The impact of the recent BRL rally can be felt by sugar traders, with prices on the significant Brazilian export nearing 11-year highs as the higher Real encourages exporters to curb sugar sales.

CNY

CNY is retreating against the Dollar today after disappointing retail and factory output data out of China provides further evidence of a slower-than-expected pandemic recovery of the Chinese economy.  In April, China’s retail sales rose 18.4% YoY, missing market expectations of 21.0% but still showing a significant increase from the previous month. 

Meanwhile, industrial production grew by 5.6% YoY, falling short of forecasts but accelerating from the last month and driven by the manufacturing and mining sectors.