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The Greenback extended its reign in the forex kingdom during the New York session while commodity currencies returned some of their recent winnings.

  • Canadian wholesale sales slipped 0.8% vs. estimated 0.3% uptick
  • U.S. flash manufacturing PMI up from 55.6 to 56.5 vs. 55.2 consensus
  • U.S. flash services PMI rose from 54.0 to 54.4 vs. 54.3 forecast
  • U.S. existing home sales up from 5.54M to 5.60M vs. 5.55M forecast

Major Events/Reports:

Upbeat U.S. data

Another set of stronger than expected medium-tier data lifted the Greenback’s spirits even as equity indices edged down.

The flash manufacturing PMI for April from Markit climbed from 55.6 to 56.5 to reflect a stronger pace of industry expansion versus the estimated dip to 55.2. Components of the report revealed that this was mostly due to an increase in new orders and output, reflecting increased demand.

The flash manufacturing PMI for the same month rose from 54.0 to 54.4, just a notch above the 54.3 consensus. Underlying figures indicated that new business for service providers spurred the gains.

Existing home sales also beat expectations with a rise from 5.54 million to 5.60 million versus the 5.55M consensus. This 1.1% gain in March was mostly due to a reversal of weather-related declines in the previous month, but lagging inventories and affordability constraints kept a lid on sales.

BOC head honcho Poloz’s speech

Bank of Canada Governor Poloz shared more deets on the central bank’s Monetary Policy Report published in the previous week before the House of Commons Standing Committee on Finance.

He started off by explaining some of the factors that led to weaker growth in the first quarter of the year, particularly adjustments to new mortgage guidelines in the housing market and weaker than expected exports.

Poloz went on to give a more upbeat outlook for the second quarter, citing expectations for larger contributions in business investment and exports. As for inflation, he predicted that it could continue to hover around 2% on temporary factors.

As in their latest statement, Poloz reiterated that the risks to the Canadian economy moving forward could stem mostly from trade policy uncertainties. He concluded:

“This progress reinforces our view that higher interest rates will be warranted over time, although some degree of monetary policy accommodation will likely still be needed to keep inflation on target.”

Dip in risk appetite?

Higher-yielding assets struggled to hold on to their gains for the rest of the session, leading equity indices and commodities to close in the red.

  • Dow 30 index is down 14.20 points to 24,448.69 (-0.06%)
  • S&P 500 index is down 16 points to 2,669.98 (-0.01%)
  • Nasdaq is down 17.52 points to 7,128.60 (-0.25%)

As it turned out, a dip in the tech sector owing to weaker smartphone sales led to these losses. Bond yields stayed supported, with returns on 10-year U.S. Treasuries surging to its highest level since January 2014.

Major Market Mover(s):

USD

The Greenback held on to its wins and went for more throughout the session, boosted by a few more upbeat medium-tier figures.

USD/JPY is up 107 pips to 108.73 (+2.29%), USD/CAD is up to 1.2847 (+0.65%), AUD/USD slumped 68 pips to .7603 (-0.89%), and GBP/USD is down to 1.3942 (-0.43%)

Comdolls

Commodity currencies weren’t having such a good time during the session as they gave up some ground to the dollar and European currencies.

EUR/NZD is up 28 pips to 1.7076, EUR/AUD rose 42 pips to 1.6054 (+0.23%), GBP/AUD rose 87 pips to 1.8335 (+0.47%), and AUD/CAD slumped 19 pips to .9770 (-0.19%)

Watch Out For:

  • 11:45 pm GMT: New Zealand visitor arrivals
  • 2:30 am GMT: Australia quarterly CPI (0.5% expected, 0.6% previous)
  • 2:30 am GMT: Australia trimmed mean CPI (0.5% expected, 0.4% previous)
  • 6:00 am GMT: BOJ core CPI (0.7% expected, 0.8% previous)