The US dollar surged yet again yesterday after dovish central bank meetings in Australia and Canada reignited growth concerns and sparked a risk-off move in currency markets. The broad dollar DXY index rallied 0.6% to hit a high not seen since May 2017, with only the Swiss franc posting gains against the greenback out of the G10 and EM currencies. Today, preliminary durable goods orders data is released for March, with an uptick from February’s -1.6% to 0.8% expected. Any positive surprises will undoubtedly strengthen the US dollar today ahead of tomorrow’s advance Q1 GDP reading. However, the downside may be limited given re-emerging growth concerns as the US economy remains a haven for developed market investors. Q1 GDP is expected to remain at 2.2% tomorrow with Goldman Sachs’ Current Activity Indicator suggesting data in April points towards a rise in growth to 2.3% thus far.


Prime Minister May will not face a vote of no confidence from her party in 2 months’ time, a decision which the 1922 committee struck 9 votes to 7. Despite retaining the current party rule book, and thus allowing the leader a 12 month grace period after winning the last no-confidence vote, the backbench committee has asked for greater clarity on the Prime Minister’s exit date. This removes some tail risk for sterling as May’s early departure, without a deal in place it would currently seem, would have raised the possibility of a more dramatic shift in the current Brexit process from the status quo; most likely to a harder exit. Sterling’s reaction remains muted, however, as the pound becomes fatigued to the minor Brexit headlines in anticipation of actual progress.


The euro fell another 0.5% yesterday, pushing EURUSD down 0.85% over the course of the week at the time of writing. Poor data out of Germany yesterday added to the euro’s list of woes, with the negative surprise in the Ifo expectations index pointing towards a sluggish rebound in growth for the Eurozone’s biggest economy. While the US dollar reigns supreme, the euro continues to suffer losses as the data doesn’t remain supportive. EURUSD currently sits at its lowest level since June 2017 with the ECB set to publish its economic bulletin later today.


The Bank of Canada’s latest rate decision proved net dovish for the loonie. The Governing Council’s decision to lower the forecast for the neutral range by 25 basis points, downgrade the 2019 GDP forecast and remove the hiking bias from their statement saw USDCAD jump 0.5% immediately. Despite the announcement not surprising many analysts, the move was regarded by markets as the most dovish likely outcome. With the BoC falling victim to the recent trend of dovish central banking, the loonie will look towards a plateauing oil price and a potential rebound in economic data to make any further inroads as it sits near its 2019 low.