Kantox currency update: dollar edges down as risk appetite returns
The dollar is losing ground on early Wednesday’s trading, after a mild recovery attempt on Tuesday, following a better than expected Chinese Gross Domestic Product reading that has boosted market sentiment easing fears about the global economic outlook.
Chinese GDP has posted a 6.4% year on year growth in the first quarter, beating expectations of a 6.3% advance. The increase on risk appetite has favoured the euro, at the expense of the dollar or the yen, although the major currencies remain moving within previous ranges, awaiting key macroeconomic data today and tomorrow.
EUR/USD bounces up and regains the 1.1300 level. The euro pulled back from 1.1325 highs on Tuesday, weighed by dovish comments by ECB officials, although the pair found support at 1.1280 to regain lost ground after the release of Chinese GDP data, and return to levels beyond 1.1300. As at the London market opening times, the EUR/USD is trading at 1.1320.
GBP/USD: sideways movement below 1.3100. The pound retreated again from 1.3100 area on Tuesday on concerns that the May’s talks with the labour party have stalled, although, so far, the pair remains steady above 1.3025. As at London market opening times, the GBP/USD is trading at 1.3055.
USD/JPY: flat at 112.00 area. The dollar has remained practically flat at the 112.00level, capped below four-month highs at 112.15. As at London market opening times, the USD/JPY is trading at 112.00.
In the Calendar Today
Today National Statistics will release UK’s Consumer Prices Index data, which is expected to show its weakest increase in more than a year. This might increase negative pressure on the pound
Later on, the Eurozone Consumer Prices Index is expected to confirm the preliminary estimations of a 1.4% year on year increase. The market has already priced in that reading, this we do not expect a relevant reaction from the euro.
08:30 GMT UK: Consumer Prices Index (YoY) (Mar)
Prev: 1.9% Cons: 1.6%
09:00 GMT EZ: Consumer Prices Index (YoY) (Mar)
Prev: 1.4% Cons: 1.4%