Daily Currency Update

USD - US Dollar

The USD is slightly stronger as the month ends, while the EUR remains stable after positive Q1 GDP growth data in the Eurozone. As the FOMC meeting begins, market caution is evident, with European stocks mostly down and US equity futures slightly lower. European bonds are softer, and the US 10Y bond yield has edged up overnight. Markets expect a hawkish stance from the Fed following recent high inflation data. Despite Powell’s lack of increased confidence in reaching inflation targets, the Fed is expected to maintain current rate levels. This could support the USD within its recent range, though significant gains are unlikely. Key US data releases today include updates on the housing market, Q1 Employment Cost Index, Chicago PMI, and the Consumer Confidence update from the Conference Board.

CAD - Canadian Dollar

The CAD has weakened slightly in overnight trade, influenced by a stronger USD and weaker market risk appetite. It remains close to its estimated fair value equilibrium (1.3846). While external factors currently drive the CAD, robust domestic growth data expected today could slightly lower its value. Canadian monthly GDP for February is expected to increase by 0.3%, slightly below the 0.4% preliminary estimate, following a 0.6% gain in January. This performance is likely to keep the Bank of Canada from adjusting rates until later in the second half of the year.  Observe the USD/CAD exchange rate. 

EUR - Euro

The EUR is performing well, nearing yesterday's peak of around 1.0730 against the USD after stronger than expected Q1 GDP data from major Eurozone economies. Italy showed a lead with growth just over 0.3% for the quarter. Eurozone GDP also increased by 0.3%, surpassing the 0.1% forecast, with an annualized growth rate of 1.3%. This data suggests an improvement in the Eurozone's previously weak growth trends, with an expected pickup in activity in the second half of the year as interest rates begin to decrease.

GBP - British Pound

Sterling remains steady today, with UK consumer borrowing and mortgage data meeting expectations. Recent survey results show a decline in price pressures. The index recorded a slowdown in price increases to 0.8% year-over-year in April, the lowest since late 2021, down from 1.3% in March. Notably, non-food prices dropped by 0.6%, marking the first decrease in two years.