Daily Currency Update

USD - US Dollar

The USD rose yesterday amid better-than-expected ISM manufacturing data, causing Treasury yields to fall. However, today, the DXY index slightly declined, facing resistance around 105. Gold prices are strong, hitting a new high, as investors anticipate lower global interest rates and seek alternatives to high-valued stocks. Central banks are also diversifying away from the USD. Today's focus is on US JOLTS and Factory Orders data, with several Fed speakers, including voters Bowman, Williams, Mester, and Daly, potentially influencing market sentiment and the USD with their views on interest rates.

CAD - Canadian Dollar

The CAD remains stable after the BoC's Q1 Business Outlook Survey indicated positive trends for policymakers, with easing inflation expectations, normalizing pricing behavior, reduced recession fears, and a slightly improved growth outlook compared to Q4. However, increasing uncertainty and declining investment intentions suggest businesses are cautious about potential challenges ahead. The survey suggests no immediate need for rate cuts, with swap markets showing negligible expectations for a rate reduction on April 10th and only a 50% chance for a 25bps cut by June. Observe USD/CAD trend.

EUR - Euro

EUR/USD remains steady today. German CPI for March is due at 8.00ET, with preliminary regional data suggesting a potential slight miss on the expected 0.5% month-over-month increase. Analysts anticipate a slowdown in year-over-year inflation to 2.2% from February's 2.5%. Weaker data might slightly pressure the EUR, but an ECB rate cut before June seems unlikely, with swaps indicating minimal expectation (3-4 bps) for a reduction in the upcoming Thursday policy decision.

GBP - British Pound

London's trading resumption post-holiday has slightly boosted the GBP from the low 1.25 range. Gilts fell sharply, aligning with Treasurys after the UK's break. The BRC Shop Price Index revealed a notable slowdown in March retail prices, with the index dropping to 1.3%, significantly below the anticipated 2.2% rise, and down from 2.5% in February.