Daily Currency Update

USD - US Dollar

Ahead of a long weekend for many, markets are trading with a mildly defensive tone. European stocks are mostly flat to slightly firmer, while US equity futures are flat to slightly weaker. Bonds are mostly firmer, and crude oil has dipped slightly. US weekly claims data will be released at 8:30 ET, and Bullard will speak at 10:00 ET, who has previously expressed the view that the Fed needs a policy rate above 5%. However, Bullard is not a voter this year. US NFP data will be released on Friday, with most US markets closing early for the long weekend.

CAD - Canadian Dollar

USD/CAD has traded within the 1.34/1.35 range this week. Canada's upcoming employment report is expected to show a modest gain in jobs, with forecasts ranging from +7.5k to +40k, and a potential slight increase in the unemployment rate from 5.0% to 5.1%. Hourly wage growth may remain elevated and may potentially pick up from February's 5.4% gain to regain 5.5%. The recent Business Outlook Survey indicated some softening in the labor market and wage pressures, but with over half of respondents planning to increase hiring in the next 12 months. Policymakers may have concerns about elevated wage growth, as it could be inconsistent with regaining control of inflation unless accompanied by significant productivity gains in the domestic economy.

EUR - Euro

Yesterday, the EUR/USD pair experienced a sharp reversal from its high of 1.0970, despite the US services ISM showing a significant decline and a drop of 11 basis points in short-dated US yields. Interestingly, the two-year differential between EUR and USD swap rates is narrowing and approaching levels last seen in early March. This price action confirms our expectation for EUR/USD performance in the upcoming quarter. Despite the negative macroeconomic factors affecting the US dollar, we anticipate that the challenging risk environment could keep EUR/USD fluctuating within a range of 1.05-1.10. we expect EUR/USD to hover around the 1.0900 level today.

GBP - British Pound

As the UK long weekend approaches, the Pound is drifting with overnight losses close to yesterday's low, aligning with technical indicators that suggest support for the pound. UK Construction PMI data for March came in slightly weaker than forecasted, with the index hovering around the 50 marker for the past few months due to the slide in the UK housing market. Short-term range trading is expected today ahead of the long weekend.