Dollar Strengthens Against Major Currencies But Yen
The US dollar improved versus its major trading partners early Tuesday, apart from another small decline against the yen, ahead of the release of several data reports, including home prices, new-home sales, and consumer confidence.
The week’s data schedule remains hectic through the end of the week, with advance trade and pending home sales on Wednesday, the advance GDP reading for Q1 on Thursday and personal income and spending on Friday as the key releases.
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 Tuesday shows that EUR-USD fell to 1.0694 from 1.0712 at the Monday US close and 1.0726 a day earlier. There is no EU on the data schedule on Tuesday.
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 in possible in July and ECB President Christine Lagarde has suggested that bond purchases would end early in the second half of the year. EU inflation data will be released on Friday.
GBP-USD fell to 1.2715 from 1.2741 at the Monday US close and 1.2712 a day earlier. There are no UK data scheduled for Tuesday. Markets expect another rate increase at the Bank of England’s next meeting on May 5, with a 50-basis point increase possible.
USD-JPY slipped to 127.6506 from 128.1329 at the Monday US close and 128.1558 a day earlier. The Japanese unemployment rate declined in March to its lowest level since the start of the pandemic, data released overnight showed.
The Bank of Japan meets Wednesday and Thursday and is expected to maintain its ultra-low interest rate policy. The BOJ continues to buy securities to defend its interest rate cap.
USD-CAD rose to 1.2744 from 1.2736 at the Monday US close but was down from 1.2761 a day earlier. Canada manufacturing sales data is scheduled to be released Tuesday. READ: Dollar Steadies Against Major Currencies Ahead of Data Release
The Bank of Canada meets next on June 1, where another 50-basis point rate increase is expected. Some are pricing the outside possibility of a 75-basis point hike if the inflation data suggest a need for it. #Dollar Strengthens Against Major Currencies But Yen
