Daily Currency Update

USD - US Dollar

Yesterday’s FOMC meeting was less hawkish than expected, leaving policy largely unchanged and maintaining rate drop expectations. Economic forecasts suggest stronger growth and slightly higher inflation, unsurprising given the US economy's resilience. Powell's remarks didn't significantly alter the market's view. This eases concerns over a hawkish Fed, potentially softening the USD, especially to offset recent gains fueled by inflation worries. The DXY showed a technical reversal, hinting at a possible near-term decline of 0.75-1%.

CAD - Canadian Dollar

The CAD remains stable after the BoC's March policy summary indicated it's "too early" for rate cuts, despite diverse opinions on timing among policymakers. The bank anticipates a slow economic downturn but is optimistic about employment risks reducing. A cautious stance persists on rate cuts expected later this year, with concerns that a housing market rebound could hinder price stability. Near-term support for a firmer CAD comes from lower US rates and shrinking US/Canada spreads, alongside positive seasonal trends into Q2. Observe USD/CAD trends.

EUR - Euro

EUR/USD dipped from its high after disappointing PMI data, with weak performance in France and German manufacturing below expectations. Despite stronger Eurozone Services and Composite figures, Manufacturing faltered. Nonetheless, EUR/USD found strong support below 1.09, buoyed by robust demand for EURCHF after the SNB rate cut, aiding overall EUR stability.

GBP - British Pound

The UK's preliminary March PMI indicates a modest recovery, with Manufacturing rising to 49.9, surpassing expectations, and Services slightly down to 53.4 from 53.8. The Composite Index marginally fell to 52.9. These figures are unlikely to influence today's BoE policy decision, which is expected to remain unchanged.