Daily Currency Update

USD - US Dollar

The USD is slightly stronger against major currencies as markets await U.S. inflation data. Stocks are cautious, bonds a bit stronger, and commodities mixed with varied performance in crude, iron ore, and copper. U.S. PPI data could show a 0.3% increase in overall prices and a 0.2% rise in core prices for the month. Annual PPI is projected to rise to 2.2%, while core PPI might slow to 2.3%. A rate cut by the Fed is not fully expected until November. A surprise increase in data might not greatly affect the USD, but weaker data could lower it more significantly. Fed Chair Powell will speak at 10 a.m. ET.

CAD - Canadian Dollar

The CAD remains steady today, showing little change despite a sustained narrowing in US/Canada yield spreads, which hints at a potentially stronger CAD. Fair value dropped slightly to 1.3587 today. The CAD's short-term direction will depend on the market's response to this morning's U.S. data, but USD/CAD is likely to face increased selling pressure in the upper 1.36s. March Wholesale Sales data will be released at 8:30 a.m. ET. 

EUR - Euro

The EUR briefly fell in early European trade, influenced by a sharp drop in the GBP, but has since rebounded to around 1.08. Germany's ZEW Survey showed better-than-expected investor expectations for growth and lower interest rates. Final CPI data from Germany and Spain were consistent with preliminary reports, while wages rose by 4.3% in Q1 year-over-year, outpacing inflation. This wage trend may influence ECB hawks.

GBP - British Pound

Sterling briefly dipped after UK labor market data indicated a slight weakening, with the unemployment rate rising to 4.3% and jobless claims increasing by 8.9k in April. However, wages continue to rise, with Average Weekly Earnings up 5.7%, surpassing the expected 5.5%. BoE economist Pill suggested that rate cuts might be considered over the summer as inflation eases. Despite this, expectations for a BoE rate cut barely strengthened, and the Pound found support, rebounding to levels seen before the data release.