Dollar Holds Strong Ahead of Trade Data
The US dollar was stronger versus its major trading partners early Wednesday ahead of the release of advance trade data and the monthly pending home sales index.
The advance GDP reading for Q1 will be released on Thursday along with weekly initial jobless claims, followed by personal income and spending and the Michigan Sentiment Index on Friday.
Federal Reserve officials remain in a quiet period before the May 3-4 Federal Open Market Committee meeting, where markets expect that a 50-basis-point increase is a distinct possibility based on recent comments from officials.
A quick summary of foreign exchange activity heading into Wednesday shows that USD-CAD rose to 1.2837 from 1.2826 at the Tuesday US close and 1.2736 a day earlier.
Canada ADP employment data is scheduled to be released today. The Bank of Canada next meets on June 1, when another 50-bp rate increase is expected, and a 75-bp hike is being priced in by some.
USD-JPY rose to 127.9181 from 127.2126 at the Tuesday US close and 127.6801 at the same point a day earlier. There are no Japanese data releases on Wednesday’s schedule, so the focus is on the Bank of Japan monetary policy meeting announcement. No change in policy is expected and the BOJ continues to defend those low rates with bond buying.
EUR-USD fell to 1.0599 from 1.0637 at the Tuesday US close and 1.069 a day earlier. There are no EU releases on the data scheduled for Wednesday. The European Central Bank’s tightening path is a bit behind that of the Fed though some ECB officials have signalled that a rate increase is possible in July.
ECB President Christine Lagarde speaks twice on Wednesday. EU inflation data will be released on Friday. GBP-USD was virtually unchanged at 1.2574 from 1.2575 at the Tuesday US close but was down from 1.267 at the same point a day earlier.
British retail sales slowed in April according to data from the Confederation of British Industry released earlier Wednesday. Markets expect another rate increase at the Bank of England’s next meeting on May 5, with a 50-basis point increase possible. # Dollar Holds Strong Ahead of Trade Data

