Daily Market Update

Dollar Modestly Stronger; No Data Today

April 20, 2018

The U.S. dollar is up again today, although modestly.

USD

The Bloomberg Dollar Spot Index is set to rise for a fourth straight day, the longest rally since February. The greenback is taking advantage of volatility in bond, equity and commodity markets due to headline risk surrounding trade, Russian sanctions and the rally in the price of oil.

There is little in the way of fundamental data set for release in the States today, so the greenback is likely to continue to take its cues from developments abroad. In the afternoon, traders are likely to turn their focus on to next week’s busy schedule which includes US GDP and durable goods orders and interest rate decisions from the European Central Bank and the Bank of England.

 

EUR

The Euro is softer again this morning on consistently underwhelming data. German PPI rose 0.1% month over month in March, but below the forecasted 0.2% advance. The European Central Bank is set to meet next Thursday. It is widely expected that the ECB will not move from their current policy. However, market participants will look to indications from Mario Draghi as to how the Governing Council looks to communicate its stimulus exit plan.

 

GBP

The British pound fell overnight and continues to be under pressure in early trading following dovish comments from Bank of England head Mark Carney. The Bank of England is set to make an interest rate decision next Friday. Mr. Carney said that policy makers would make their decision “conscious that there are other meetings” in which they could act this year. This apparent attempt to kick back expectations has worked. Futures show that the chance the BoE would boost rates next week fell from 80% to under 50%, dragging the sterling lower. This sets up to be, what we believe, will be a volatile week for GBP/USD leading up to the meeting.

The sterling is set for its fourth daily loss against the greenback.

 

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