The U.S dollar’s recent rally took a break overnight, as the greenback attempts to establish new, stronger ranges.
Overall, the Bloomberg Dollar Spot Index continues to trade right near a three month high. The dollar remains supported as the yield on the ten-year approaches, but stays below, 3.0%.
Later this morning, new home sales are expected to show 1.9% growth in March, up from -0.6% in February. A separate report is expected to show the Richmond Fed manufacturing index rose to 16, which would beat out the 15 reading of last month. The Conference Board’s consumer confidence measure is also slated for release at 10 a.m.
After the data, expect the greenback to trade off of technicals and try to maintain new ranges against the majority of its G10 counterparts. Also, look for the yen to continue to be under pressure as traders unwind the Q1 haven-driven rally.
The Euro slipped farther overnight before recouping some of its losses. Overall, the Euro remains at the weakest level in seven weeks against the U.S. dollar and less than half a percent away from its 2018 lows. Once again, the economic docket has been no help for the common currency. Italian, French and German business/manufacturing confidence all fell slightly this month, adding to the narrative of a modest dip in business confidence.
The British pound ticked slightly higher overnight, marking its first advance in over a week. After trading to post-Brexit highs last week, the sterling has come under immense pressure as expectations for a Bank of England rate hike have been reduced. The BoE’s next meeting will take place on May 10th with odds of a rate hike now hovering near 50%. As such, any headline that could change investor’s thinking will likely cause GBP/USD volatility. It is Tempus’ view that the Bank of England will raise interest rates by 25 basis points.