Daily Currency Update

USD - US Dollar

Global FX markets remain quiet with a slightly stronger dollar. This strength is driven by a surprise rise in US May consumer confidence and a slight increase in US yields following weak auctions of two and five-year Treasuries. Today's light US data calendar includes Fed speakers and the release of the Fed Beige Book ahead of the June 12 FOMC meeting. DXY held support at 104.40 and may edge higher within a 104.40-105.00 range due to rising bond yields globally.

CAD - Canadian Dollar

The CAD is trading around 1.3650 in an environment with growing risk aversion favoring the USD and a correction in crude oil prices. Canadian economic data showed a surprising 1.5% month-over-month rise in industrial product prices in April, exceeding forecasts and indicating strong production-level price pressures. This could affect expectations for the Bank of Canada's early June monetary policy. Observe the USD/CAD trend. 

EUR - Euro

The key event in the eurozone this week is Friday's flash CPI release for May. Today's German CPI data, expected to rise slightly to 2.4% YoY from 2.2%, will contribute to that release. This won't prevent the ECB from a rate cut next week but may reduce market expectations for further cuts this year. Currently, 58bp of ECB rate cuts are priced for 2024, down from 75bp two weeks ago. EUR/USD might retest 1.0800.

GBP - British Pound

Sterling has corrected to 1.2750 after reaching a 10-week high pressured by a dampened UK inflation outlook and a recovering USD. Significant easing in shop price inflation suggests potential BoE rate cuts. With food and non-food price inflation decreasing, the BoE may consider rate adjustments as early as August.