Yesterday was all about the greenback once again. The currency soared to its best levels against the euro since June 2017 and a multi-month high against the withering pound.
The catalyst for the move was unclear, however, an increase in positive sentiment recently along with US stock markets once again heading for all-time highs, has bolstered the view that the next move in interest rates by the Federal Reserve will be higher. There were no major US data releases yesterday but a softer than expected German business sentiment print put pressure on the euro. Finally, after being tested 3 times for support, the $1.12 figure broke. This led to a surge in dollar buying across the board, pushing the pound to briefly trade with a $1.28 handle late in the North American session. Momentum remains with the buck – today sees a couple of tier 1 data releases from the US but, no doubt, all eyes will be on tomorrow’s GDP print.
The Canadian dollar weakened on Wednesday, adding additional pressure to commodity currencies in general. The Bank of Canada held rates steady at 1.75% but added some dovish commentary along the way. The central bank have now confirmed that it is possible rates now move lower as opposed to higher. They also acknowledged a concern for global growth generally. The Loonie traded down across the board to the tune of 0.5%.
Overnight the Bank of Japan have maintained rates at -0.10%. The accompanying statement has been perceived as neutral which is a shift from the central bank’s usually dovish tone. As a result, the Japanese yen has a mildly bid tone to it, rallying just shy of 0.20% against its peers.
Written by Viv Savani. 8:55am, April 25th 2019
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