- US Q1 GDP expected to rise 2.5%.
- German data underpinning EURUSD
- USD trades defensively and slips against the majors.
USDCAD: open 1.3677, overnight range 1.3670-1.3708 close 1.3702, WTI $82.73, Gold, $2324.98
The Canadian dollar continues to seesaw inside the well-defined USDCAD range of 1.3650-1.3740 that has contained price action since last Friday.
Today’s focus is squarely on the US Q1 GDP report, which is expected to show that the American economy grew by 2.5%, adding further support to the “soft-landing” argument. The soft-landing view is further reinforced by the Atlanta Fed's EconomyNow forecast of 2.7% for GDP.
The sustained resilience of the U.S. economy is evident in the face of ongoing Federal Reserve rate hikes that began in March 2022. Financial conditions have adapted to higher market yields without significant tightening across multiple measures. Credit spreads remain tight, and the S&P 500 has only slightly receded from its peak, indicating continued investor confidence. Moreover, the dollar's strength boosts consumer purchasing power, mitigating the impact of higher import costs.
Global equity markets are trading mixed to lower. In Asia, Australian and New Zealand markets were closed for ANZAC Day celebrations. Japan’s Nikkei 225 index dropped 2.16%. European equity indexes are slumping except for the UK’s FTSE 100 index, which has risen 0.63%. Wall Street is poised to open with losses as S&P 500 futures have dropped 0.70%.
EURUSD traded firmer in a 1.0694-1.0730 range with prices supported by the mix of strong German Ifo data yesterday and today’s better-than-expected Consumer Sentiment data (actual -24.2, previously -27.3). EURUSD resistance in the 1.0750-60 area is reinforced by $1.6 billion of option strikes rolling off at 10 am.
GBPUSD is bid in a 1.2444-1.2523 range after comments by Bank of England Chief Economist Hu Pill raised fears that the BoE may not be easing as soon, or as fast as other policymakers had indicated.
USDJPY is in demand and climbed from 155.20 to 155.75 range overnight, BoJ and Finance Ministry officials continue with their verbal intervention but traders say “action speaks louder than words.” The US 10-year Treasury yield is at 4.642%, adding further support to prices.
AUDUSD traded in a 0.6482-0.6531 range in quiet trading with prices tracking broad US dollar sentiment.
US data includes weekly jobless claims, Pending home sales, Wholesale inventories, and PCE
