Daily Market Update

U.S. Dollar Stays Strong as ECB Remains Cautious

April 26, 2018

Currency markets were mostly quiet overnight ahead of a slew of risk events on today’s schedule including tier one US economic data and the European Central Bank interest rate decision.

USD

On our side of the pond, the data was mixed. Durable goods orders, overall, beat expectations by rising 2.6% in March. February’s number was also upwardly revised to 3.5%. However, a breakdown of the number was less rosy. Non-military capital goods excluding airgrat fell 0.1%, failing to meet estimates of a 0.5% gain, according to the Commerce Department. The decline in shipments on non-defense capital goods was the largest since May 2016.

Jobless claims remain at a four decade best. Later, the Bloomberg Consumer Comfort index will cross the wires. GDP will highlight tomorrow’s docket.

 

EUR

EUR/USD is experiencing high volatility this morning as European Central Bank President gives a press conference. The Euro briefly traded below its March 1st low against the U.S. Dollar after the ECB kept rates on hold as expected.

At the time of writing, Draghi’s commentary became more positive during his press conference highlighting solid growth with some moderation while staying optimistic on the economic outlook.

He was not overtly confident on inflationary growth, saying that it had “gone sideways” while mentioning satisfaction with recent wage earnings. Euro seems poised to remain in these ranges, around their weakest against the dollar in around three months.

 

JPY

The Japanese Yen is still trading around its worst level since the start of February, plagued by the potential issues for Prime Minister Shinzo Abe over accusations of corruption. Furthermore, the recent surge in risk-appetite has aided the dollar while crushing the safe-haven currency. We see no action tomorrow by the Bank of Japan and if anything, their lack of determination to tighten may sink the Yen further, especially if rosy markets remain flourishing.

 

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