The US dollar traded mixed against the G10 yesterday in what was a relatively muted session. Chicago’s Federal Reserve President Charles Evans made some dovish squawks when he said: “If core inflation were to move down to, let’s just say, 1.5 percent”, that would indicate that monetary policy “is actually restrictive in holding back inflation, and so that would naturally call for a lower funds rate”. He added it was purely hypothetical, but with core inflation currently standing at 1.8%, this can be taken as a hint that risks towards a further loosening rate policy remain ever-present. Meanwhile, the US and China trade negotiations continue to proceed with some goodwill towards the Trump administration showing from the Chinese camp. The US may be unwilling to lift tariffs on $50 billion worth of Chinese goods, while the Chinese nevertheless may consider changing on which goods they’re counter tariffs are aimed, which can help President Trump to sell any eventual trade deal as a victory for American farmers ahead of the 2020 election. Today sees the Capacity Utilisation Rate and Industrial Production at 14:15 BST.


Sterling continued to float higher yesterday in a session which lacked the usual Brexit headlines. Today, the loaded data calendar for the UK begins to be released with March’s labour market data released at 09:30 BST. With the production side of the UK economy beginning to show signs of faltering, investors will look at the rise in real wages to gauge how much fuel is left in the tank for consumers to keep growth levels afloat.


The euro yesterday continued to reside near Friday’s three-week highs on EURUSD as the thin data calendar provided little incentive for traders to open fresh positions. One of the smallest Eurozone countries population wise, Finland, has seen the Social Democrats win the elections this Sunday with a margin of only 7.000 votes on an anti-austerity agenda. This signals a more loose fiscal spending trend may be due in the Eurozone, especially in the Northern countries which appear to have the fiscal balances to responsibly afford this. Of course, Finland is only a small country, and it will only really start to move the needle if a large country like Germany would see a similar election result. Nevertheless, such spending while government borrowing costs are at all-time lows can create the boost to domestic demand the Eurozone economy sometimes so desperately seems to lack. On the trade front, European Union countries came and decided to open trade talks with the US to eliminate tariffs on industrial goods, while agricultural products are still excluded. Today at 10:00 BST we see the ZEW German Economic Sentiment telling us whether the recent stabilisation in business sentiments in the Eurozone proves lasting.


The Canadian dollar was the worst performing G10 currency against the US dollar yesterday after the Q1 Business Outlook Survey outlined falling inflationary pressures which prompted markets to reprice the probability of a rate change by the Bank of Canada. Current pricing suggests a 15% probability of a rate cut by Septembers meeting. Weakening underlying demand, an uncertain outlook in the Western Canadian energy sector and spillover effects from global trade tensions pushed the business sentiment index to negative for the first time since Q3 2016.