The greenback led the G10 currency pack from the bottom yesterday, as risk sentiment had a stellar day, while treasuries softened across the curve. The reason mentioned for this is an auction cycle starting in May, which keeps futures volumes subdued. Factory Orders were negative yesterday for the fourth time in five months at -0.5%, showing the US industrial sector may not be immune to the woes that plague the Eurozone’s and China’s manufacturing sector. In a sense, this may be a good sign for the global trade environment, because if the data starts to show the US is hurt as well, the appetite for the US to come to a deal with China likely increases. Today sees the NFIB Small Business Index at 10:00 BST, followed late in the evening by Federal Reserve speakers Randal Quarles at 21:00 and Fed Vice-president Richard Clarida at 22:45.
Sterling had a quiet day yesterday, seeing marginal gains versus USD and losses to the euro. The usual Brexit noise is emanating from the press this morning, as Theresa May faces yet more verbal opposition from members of her own party after moving last night to allow Britain to participate in European parliamentary elections, a prerequisite for a long extension to Brexit. She will head to Berlin and Paris today to discuss such an extension. This morning’s sole major data release was the British Retail Consortium Retail Sales Monitor, which saw a sharp 1.1% contraction in same store sales compared to a year ago in March, suggesting UK consumers are finally feeling some of the uncertainty that has weighed on business investment in recent quarters.
The euro was among the strongest performers of the G10 currency board yesterday, although it couldn’t keep up with the rally staged by resources sensitive currencies like NOK and CAD. Domestic data had a touch of optimism to it as well, as the Sentix Investor Confidence Index exceeded expectations as it came in at – 0.3, where a score of -1.7 was expected. The expectations subindex is starting to outperform the current situation subindex, which in general is a bullish sign in this survey. Today is pretty quiet on the Eurozone data front, which allows markets time to prepare for the European Central Bank meeting of tomorrow.
The Canadian dollar only had to share the G10 FX podium with NOK and SEK yesterday as oil prices rose to a five-month high, which lifted the loonie as well. Conflicts ranging from Iran to Libya raised the prospect of a tighter oil supply. Simultaneously, the global economy may be slowing down somewhat, but continues to grow fast enough to keep demand resilient, which is supportive for oil prices. Meanwhile, Building Permits showed a sharp decline for the second month in a row, hinting at a slowdown in the construction sector.
The Mexican Peso was among the best performers against USD yesterday, completing four consecutive days of gains as global risk appetite continued to improve and crude oil prices extended last week’s rally. Today at 14:00 BST updated monthly and bi-weekly Consumer Price Index figures will be released.