Despite expectations that today’s US Retail Sales Advance (Apr) M/M 0.0% vs. Exp. 0.2% would pick-up after four consecutive misses this year, the data disappointed and consequently sent the US Dollar Index to 3-month lows as chances of a delayed rate hike by the Fed continues to grow. Moreover, the decline in the import price figure marked the longest streak of Y/Y declines outside of a recession on record. |
Meanwhile, GBP/USD has been subject to volatile swings after initially surging to five month highs on the back of upbeat UK jobs wage growth numbers (Mar) 1.9% vs. Exp. 1.7%), however the pair was forced to give back all of its gains after the release of the less hawkish than expected Bank of England Quarterly Inflation Report as the central bank cut their CPI forecast for 2016 to 1.6%, cut 2015 and 2016 GDP forecast and highlighted downside risks to near term inflation. Interestingly, Bank of England Governor Carney did mention that the market is somewhat accurate in their estimations of a Q2 2016 rate hike. However, heading into the European market close, GBP/USD began its upward trend after the weak US retail sales weighed on the greenback.
EUR/USD shrugged off weaker German GDP and Eurozone industrial production to finish the session higher by over a point and sit comfortably above 1.1300, with no further salient developments on Greece in the session except for the Greek Interior Minister reiterating that a Greek referendum or snap election will not be held at this moment in time.
The pick-up in oil prices has bolstered commodity-linked currencies, with USD/CAD reaching its lowest levels since mid-January. Meanwhile, AUD/USD gained over a point against the USD and broke above its 0.8100 handle, while fellow antipodean counterpart NZD/USD moved in tandem.
Looking ahead: tomorrow sees the release of US Initial Jobless Claims, EIA NatGas storage change, ECB’s Draghi (Soft Dove). Furthermore, Swiss, Austrian, Norwegian, Danish and Swedish markets are close for the Ascension Day holiday.