Kantox currency update: political turmoil in the U.S. hurts the dollar
The dollar plunged across the board on Wednesday, with the investors wary that the deepening political instability in the U.S will hamper President Trump’s ability to implement the promised fiscal stimulus plan to boost U.S. economy.
EUR/USD surges to fresh 6-month highs near 1.1200. The euro extended its rally on Wednesday to hit another 6-month high at 1.1170. The common currency has appreciated about 8% so far this year, to retrace november and december’s losses and return to levels previous to Trump’s victory in the U.S. presidential elections. At London market opening times, the EUR/USD is trading at 1.1145.
GBP/USD: capped again below 1.3000. The sterling extended on Wednesday its rebound from last week lows at 1.2845 to hit resistance, once again in at 1.2990 and pull back during Thursday’s Asian session. At London market opening times, the GBP/USD is trading at 1.2955.
USD/JPY: plunges to 3-week lows below 111.00. Dollar reversal from last week highs above 114.00 extended sharply on Wednesday with investors averse to risk amid the growing political uncertainty in the U.S, which sent the dollar plunging about 250 pips to hit three-week lows at 110.50. At London market opening times, the USD/JPY is trading at 111.30.
In the Calendar Today
At 08:30 GMT National Statistics will release the UK retail sales, which are expected to have rebounded after the sharp decline seen in March. Consumption is being one of the main concerns of UK economic authorities thus, another disappointing reading in retail sales might add selling pressure on the pound.
At 17:00 GMT all eyes will be on ECB president Draghi’s speech. After Macron’s victory in the French elections and with Eurozone economy growing at a steady pace, investors will be looking for hints about a change in the Bank’s forward guidance, although we do not expect relevant changes on the bank’s rhetoric, at least until June’s meeting.
08:30 GMT UK: Retail Sales (MoM) (Apr)
Prev: -1.8% Cons: 1.0%
17:00 GMT ECB: Mario Draghi’s speech