The greenback remained well bid yesterday, giving back some of its gains versus the G10 overnight. US-China trade remains in focus, but little meaningful information has emerged recently, aside from some chatter yesterday and overnight about China potentially embargoing the export of rare earth minerals to the US. The second reading of US Gross Domestic Product growth in the first quarter of the year will be released today at 13:30 BST, accompanied by the GDP Price Index and weekly Jobless Claims.


Sterling weakened further against the US dollar yesterday, and has reached a fresh low for the month this morning after Phillip Hammond spoke out against a no-deal Brexit, saying that Theresa May’s departure did not alter the UK’s position with the EU. Aside from this snippet, Brexit news flow has been mercifully sparse over the past 24 hours. No headline UK data will be released today.


The euro also struggled against the greenback yesterday, following sterling and most of the G10 lower. Some idiosyncratic euro factors bear mentioning; German Unemployment data was dismal, showing a net loss of 60,000 jobs in April. The Eurpean Commission, in the meantime, confirmed in a letter to Italy that the country risked being sanctioned for breaching EU fiscal deficit rules. There is strong economic evidence that the Commission is in its estimate that Italy’s economy is operating close to its maximum potential and that fiscal easing will not create meaningful growth. Robin Brooks of the Institute of International Finance, dismissed the Commission’s position as “nonsense”, while former IMF Chief economist Olivier Blanchard said we “really don’t know” if unemployment can decline further without inflationary pressure. Many european countries will enjoy bank holidays for Ascension Day today, including France and Germany.


A reasonably optimistic Bank of Canada statement did little to support the loonie yesterday, which saw only a mild rally overnight against the US dollar. The BoC kept rates unchanged as widely expected, with the statement suggesting policymakers were not too concerned by the recent growth slowdown, and remain willing to look through it due to improving activity in the oil sector and a strong labour market. The Bank interpreted recent job gains as a sign that businesses viewed the last couple of quarters of weak growth as transitory, which coincidentally the Bank’s own view. However, ongoing trade risks and a relatively tame inflation outlook mean that Poloz & co will be in no rush to turn hawkish.