Daily Currency Update

USD - US Dollar

The dollar has settled back into a period of consolidation following its recent upward movement last week. The release of the core PCE deflator for March this Friday is the key event of the week, and it will play a crucial role in determining if there's a need for further increases in US short-term yields. Notably, the current 5% rate on US two-year Treasury yields could be particularly appealing to investors given the ongoing global geopolitical tensions. For today, it's unlikely that the US April PMIs or new home sales data will significantly impact the dollar. The Dollar Index (DXY) is expected to remain within a 105.75-106.50 range, though it retains a bullish outlook.

CAD - Canadian Dollar

The Canadian Dollar is strengthening, now trading near 1.3695, despite a decline in crude oil prices, which typically undermines the loonie. Attention is centered on today's US PMI data, with additional key US economic indicators like GDP and Core PCE due later this week. Moreover, the retail sales data set to be released on Thursday could shed more light on the state of the Canadian economy and potentially influence the direction of the CAD. Observe USD/CAD trends.

EUR - Euro

The Euro has dipped slightly, now in the 1.0670 range following preliminary April PMI data that showed mixed economic signals. While the Manufacturing PMI fell short of expectations, a robust Services PMI pushed the Composite PMI above anticipated levels, suggesting resilience in the Eurozone's economy. This mixed set of data paints a detailed picture of the economic health in the Eurozone, likely influencing the EUR's movements against the dollar.

GBP - British Pound

Yesterday, Sterling dropped significantly after comments from Bank of England's deputy governor, Dave Ramsden. Internal BoE signals now point to a possible rate cut, with the likelihood of a June reduction rising to nearly 50% from last week's 25%. The GBP/USD pair, closely tied to the one-year GBP:USD swap differential, might move toward 1.21. BoE Chief Economist Huw Pill's speech later today could further influence this trend, although the earlier release of the April flash services PMI might provide a temporary lift to Sterling.