USD

This morning, the greenback is up slightly as investors wait for updates on US debt ceiling talks and tomorrow’s inflation data – which will heavily influence market sentiment. Much of this morning’s move into the Dollar has been due to a dip in risk appetite after unfavorable trade data was released from China earlier in the Asian session. Despite making small gains within the last 24 hours, the US Dollar index remains close to recent lows as traders watch the possibility of a peak in US interest rates. Later today, markets will monitor comments from Federal Reserve Governor Philip Jefferson and NY Fed President John Williams to see if they support or oppose market expectations of a pause in the tightening cycle in June.  

  

EUR

The Euro has inched lower this morning as moderate risk-off sentiment sees capital flow into the US Dollar and Treasuries – preferred safe-haven assets of many investors. Despite European Central Bank Policymaker Martins Kazaks hinting at the possibility of additional rate hikes this year and ECB Chief Economist Philip Lane acknowledging the strong inflation in the Euro area, Euro traders have brushed off these hawkish comments as EUR/USD remains down over 0.3% heading into the US session. The focus now shifts to tomorrow’s double dose of German and US inflation data, with German year-on-year and month-on-month numbers expected to remain in line with last month’s reading.      

GBP

GBP/USD is mostly unchanged today as investors exercise caution before Wednesday's US inflation report and Thursday's Bank of England rate decision. 

After reaching its highest level in almost a year yesterday morning, the Pound reversed course and closed out Monday slightly in the red. Meanwhile, UK housing price numbers released this morning revealed a marginal year-on-year growth of 0.1 percent in April. This is a notable drop from the 1.6% surge observed in March and marks the slowest yearly expansion since December 2012. Higher interest rates and worries about the cost of living have stunted housing demand, leading to a decline in existing property values. However, new-build prices have increased, offering some pricing stability to the overall market.

JPY

JPY is up slightly this morning as overall market risk-aversion provides a lift to the safe-haven Yen, making it one of the few major currencies to gain ground on the Dollar today. The rising Yen comes despite the latest Japanese household spending report that showed an unexpected decline in March by 1.9% year-on-year, contrary to expectations of a 0.4% increase. This marked the second contraction of the year, driven by reductions in housing, furniture and household utensils, education, and transportation. Furthermore, apart from global macro influences, the Japanese Yen has experienced a boost because of comments made by Bank of Japan Governor Ueda, who suggested a potential end to the yield curve control policy and a reduction in the size of the Bank’s balance sheet.

CAD

The Loonie joins most other majors in the red this morning – down roughly 0.1% after scraping three-week highs yesterday. The cautious market tone set this morning took a bite out of the global oil price rebound, which has put a damper on the Loonie. Markets are also monitoring the devastating wildfires in Alberta, which have displaced nearly 30,000 people and caused energy producers to halt production on approximately 319,000 barrels of oil equivalent per day - roughly 3.7% of all Canadian production.   The fallout could also impact livestock and farming, which has already experienced setbacks due to droughts in some parts of the province.   

MXN

The Mexican Peso has been volatile this morning – trading between gains and losses in the lead-up to, and immediate aftermath of, this morning's Mexican inflation data. Mexico's annual inflation rate reached an 18-month low of 6.25% in April, declining from 6.85% in March, which was just slightly higher than the anticipated 6.23%. However, inflation remains significantly above the Central Bank's 2.0%–4.0% target range. On the other hand, the annual core inflation rate remained high but declined to a nine-month low of 7.67%. Finally, consumer prices slightly decreased by 0.02% month-on-month, following a 0.27% increase in the prior month.

BRL

The Brazilian Real was dealt a big blow yesterday following Finance Minister Fernando Haddad's announcement that Gabriel Galipolo, his deputy, will be nominated for a key role at Brazil's central bank. The Brazilian government has been critical of the central bank's high interest rate policy, and markets have seen the move as a step toward a more dovish policy on the horizon. BRL has now plummeted more than 1% this week - giving back all last week's gains and more.      

CNY

The Chinese Yuan weakened again this morning amid concerns about the country's economic growth momentum, with disappointing trade data adding pressure to the currency. China's imports had fallen steeply in April – pointing to a weaker domestic economy than initially thought. Meanwhile, exports had grown, but at a slower rate than the March read. Despite the recent headlines, the offshore Yuan has just barely moved into the red for the month as its major counterpart, the US Dollar, also remains up and down.