After running up the score during yesterday’s session, the United States Dollar has lost a touch of ground this morning as markets are taking some profit on the wildly Dollar-positive move on Monday
Overview
Risk sentiment has come down a touch, boosting traditional safe havens, but traders remain largely risk-forward. Following a major détente in the US-China trade relationship, US Treasury Secretary Scott Bessent has referred to the current position between the world’s two largest economies as a ‘Geneva mechanism’ in which what some may call unforced errors from the current administration are undone and with it substantial damage to the global economy may be avoided.
The US released its CPI data for the month of April this morning, which undershot expectations of severely heightened inflation following April 2nd’s Liberation Day tariff deluge. Inflation increased 0.2% month over month, coming in below expectations of a 0.3% uptick. Annualized inflation increased 2.3% on expectations of a 2.4% rise. While the core inflation figure excluding food and energy remains elevated at 2.8%, this release is all told quite benign in the face of some economists’ expectations of a massive rise in inflation based on tariff rates. Important to note, though, is that the GDP price index for Q1 did show quite a bit more inflationary pressure than is reflected in this morning’s release. While the US may not be out of the proverbial woods just yet when it comes to inflation, today’s figures do a lot to quiet some very frayed market nerves. Of course, if a longer-term trade deal is not struck between the US and China in the next 90 days this period of relative calm could end entirely, but for now, markets are continuing to breathe a collective sigh of relief.
What to Watch This Week…
- UK GDP, Thursday
- Banxico Interest Rate Decision, Thursday
- Monex USA Online is always open
The complete Economic Calendar can be found here.
GBP ⇑
Pound Sterling is a big winner on the G10 board this morning, gaining just north of half a percent back against USD following a rout during yesterday’s trading session. The Uk released average earnings figures this morning, which as a whole came in stronger than expected and showed wages grew 5.5% per week in the last 3 months. Unemployment did tick up slightly to 4.5% from 4.4% at the last release, but as a whole the release today showed the employment picture in the UK is largely as expected. The Bank of England has highlighted that a gradual slowdown in employment is in line with their expectations as well.
AUD ⇑
The Australian and New Zealand Dollars are running up the score against USD this morning following majorly negative moves yesterday, gaining 0.85% and 0.90% against the Buck respectively. AUD continues to be a potent risk barometer for markets, and even as traditional havens are regaining some ground today Aussie shows that risk appetite is far from gone in currency markets. As a major trading partner of China, too, AUD is continuing to benefit from cooling tensions between its largest export partner and the US
