- Yesterday’s US Retail Sales data came in above expectations, further boosting the US dollar and confirming that US consumers remain resilient. The dollar index rallied following risk off headlines of potential escalation in the Middle East as traders continue to reprice Fed cuts and once again get used to ‘higher from longer’ interest rates after last week’s hot inflation report.
- The Japanese yen lost further ground against the greenback with USDJPY trading at its highest level since 1990. It was only a few weeks ago that we were concerned with the pair breaching 150, then 152 came into play and now we are around half a cent away from 155. Intervention remains a possibility and BoJ Governor Ueda is scheduled to attend this weeks IMF Spring meetings where the strength of the dollar is likely to be discussed.
- Both the pound and euro are on the back foot against the resurgent greenback with EURUSD looking set to test support below 1.06. Later this morning we await the release of the German ZEW Index for further clues on the outlook for Europe’s largest economy, although the recent moves can be attributed to the strength of the dollar, so further downside risk in EURUSD should not be ruled out.
- Cable remains in the doldrums, heading for a third day of losses with the pair hovering around 1.24. Data released this morning showed that the unemployment rate rose unexpectedly to this highest in six months, with the number of jobs in the economy shrinking. The mixed report showed a tentative sign that inflationary pressures in the jobs market are cooling, however the data also showed wage growth, which the BoE continues to closely monitor.
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