Euro weak ahead of CPI and GDP

The euro is having a torrid time ahead of this morning’s Eurozone consumer price inflation and gross domestic product data. We have already had the French GDP data for the first quarter of this year and that showed zero growth. If the eurozone-wide data is similarly below expectation, there is every chance we will see further euro weakness in the day ahead. The caveat to that thought is that this is the last day of the month and traders are likely to be closing some of their positions. As the euro has been sold quite heavily throughout the month, any euro weakness may be balanced out if traders buy the euro to square their books. Meanwhile, the GBPEUR rate is levelling off. It sits at €1.1850 this morning and was slightly above €1.19 overnight. The EURUSD rate is also levelling off but that is still down at $1.0535 this morning and did dip to $1.0476 overnight; the lowest it has been since 2002.

Sterling finds some support

Having been battered for most of April, sterling finally became so cheap buyers emerged from the woodwork to give the pound a bounce in the last 48 hours. Despite the US dollar is the strongest currency in the market at the moment, the GBPUSD rate has bounced from $1.2410 to this morning’s $1.2530. That isn’t data-driven because there has been no UK data to speak of and today is much the same on that front. However, it is the last day of the month and a long weekend for the UK markets, so a little profit-taking was inevitable at some stage.

USD continues to strengthen after 8% GDP 

In the preliminary calculations, The US economy grew by 8% in the three months to March. That still produces a contraction of 1.4% in the year-on-year calculation and that was down on expectations. However, the weekly jobless claims numbers were roughly in line with expectation and the dollar retains its status as the investor’s darling during times of strife. Hence all US Dollar related exchange rates continue to favour the US currency. This afternoon’s US personal consumption and expenditure data (PCE) is likely to reflect the rising inflation rate which isn’t being matched by wage-price inflation. That may put a dampener on US dollar strength at the moment but the trend is well and truly in place. USD buyers are having to pick and choose their timing but sellers are having a field day (field month in fact).

Canadian GDP data should boost CAD

The markets are expecting economic growth of 0.8% in February. That GDP data is released this afternoon and the Canadian dollar, which is already very strong, is highly likely to make further gains if the actual data meets or betters expectations. Having found a little support, the GBPCAD rate is level at or around CAD 1.5950 but these are some of the lowest levels since 2013. So it is a gift to CAD sellers but a problem for CAD buyers. In 2010, this pair bottomed out around 8 cents lower than the current rate. So although it looks bad for CAD buyers now, don’t be surprised if we look back at these rates in a couple of months with that wistful, ‘I should have changed my money then’ feeling.

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