After rallying last week, the U.S. dollar is under pressure this morning, especially against its European counterparts.
Overview
Poor Chinese data has sparked a minor risk-off move, limiting any major dollar declines.
The Japanese yen rose 0.4% and touched its strongest level in almost three weeks amid low trading volumes as Golden Week continues. While not affecting USD/JPY, it is interesting to note that Emperor Akihito formally abdicated his throne, making way for his son.
There is a number of second-tier economic data set for release later this morning but the prints are unlikely to spark a renewed dollar rally. Instead, traders will likely shift their focus to tomorrow’s FOMC monetary policy decision and Governor Powell’s press conference, events that will likely dictate the direction of the greenback heading into the summer.
What to Watch Today…
- No major events scheduled for today.
Complete Economic Calendar can be found here.
EUR
The Euro has successfully lifted itself off the two-year floor and has found support this morning on strong economic data. Euro-area GDP growth accelerated to 0.4% on a quarterly basis, an improvement from 0.2 in Q4 of 2018. The print beat expectations of a 0.3% rise. Italy also reported GDP the results show that they have officially exited their technical recession, but a breakdown of the data shows that domestic demand is still very weak. Nevertheless, the decent data will reduce the chances the European Central Bank will find the scope to add additional stimulus moving forward, bolstering the common currency.
EUR/USD is at a four-day high and back into ranges familiar at the beginning of the month.
AUD
The Australian dollar was unable to take advantage of general dollar weakness as poor Chinese data held back Antipodean currency. Chinese manufacturing PMI slipped to 50.1 in April, missing estimates of 50.5. An index for Chinese services and construction also missed the mark.
Traders will keep a close eye on trade developments in Bejing today. The two sides still seem far apart on a number of issues but both have expressed optimism that some major hurdles may soon be cleared.
