US$ is higher, oil prices dip, equity markets are mixed and US yields edge higher as the US$ looks set for its 4th straight week of declines. The US$ has suffered from the Fed’s dovish tone and rejecting tapering down its bond-buying scheme. Thursday’s US GDP results points to robust growth signs now and down the line which should provide underlying US$ support. Market focus shifts to US Personal Consumption Expenditures today which are expected to rise, which will highlight that inflation is here and again supports the US$ stronger scenario. In other markets, China’s factory activity growth slows in April, while Japan’s April manufacturing expands at its fastest rate in 3-years. Global covid cases hit 150million, India reports a new record of over 386k new covid cases today, while the Eurozone economy slips into another double-dip recession due to its latest round of its covid lockdowns. CNY inches higher up 0.05% to near 2-month highs, while Asian currencies are flat on average vs US$. Trading currencies are mixed with AUD down 0.1%, MXN & NOK drop 0.2% and ZAR tumbles 0.65%, while JPY is up 0.1%, NZD up 0.2% vs US$. Intraday US Personal Consumer Expenditures, alongside Chicago Purchasing Manager & Michigan Consumer Sentiment Index will provide direction to the markets today.
Oil prices ease from their 6-week highs as the markets continue to balance surging covid cases vs optimistic economic growth. Oil prices open down over 1% as demand concerns increases as Indian virus cases surpasses 18mio. C$ tested a new 3-year highs 1.2268 overnight, with the loonie rallying 2.2% month-to-date. The loonie has benefited from stronger oil prices, the weaker US$ and rate optimism after the BOC eased its asset purchase program. Intraday we are seeing both US$ & Oil prices consolidating which could see some month end US$ and pull back towards the mid 1.23’s. Focus will be on Canadian GDP and US$ data for direction. Support (Key pivot) at 1.2246 (Feb2018), if breached look for 1.2057 (Sep2017) while resistance sits at 1.2360, if breached expect a move back to 1.2430.
Euro slips below 1.21 amid weak German GDP and a firming US$. Eurozone economy feels the impact of covid-lockdowns with Germany, Spain and Italy all showing declines in growth for Q1/2021, only France posted better than expected growth. Optimism about the EU’s vaccination push will provide underlying support to the Euro. Intraday markets will focus on month-end flows and US economic data releases for direction. Support holds at 1.2060 and resistance at 1.2150.
EURGBP continues to stall at the key .8700 as markets settle down post FOMC month-end demand flows. Analysts remain bearish Eur looking for a potential move towards 0.83 (1.2048) vs GBP into H2/2021. Support holds to .8585 (1.1650) with resistance remaining at .8700 (1.1495).
GBP drops to 1.39 amid UK political concerns and a strengthening US$. The UK PM continues to come under growing scrutiny for his alleged insensitive comments and questions over the funding of his apartment refurbishment. The BOE meeting on May 6th comes into focus as analysts expect the bank will delay any taper of its asset purchases. Intraday US data will provide market direction, with the GBP vulnerable for further short-term weakness. Support at 1.3870, while resistance holds at 1.3965.