Euro fails to capitalise on stronger data

Tuesday saw the release of better-than-expected eurozone consumer price inflation data and economic growth data but nobody seems to have told euro traders it was good news. The euro hasn't responded positively to a rise of 2.7% in annualised core inflation and an annual rise of 0.4% in GDP growth in the year to March. Both figures were above expectation But the euro has trickled lower. The GBP/EUR rate is just above €1.17 and the EUR/ USD rate has slipped to $1.0660. Most of Europe is on leave today for the May Day / Labour Day public holidays. ?So there isn't a great deal of support in the markets for the euro. That may change when European trading restarts tomorrow.

NZD stable after unemployment uptick

The unemployment rate in New Zealand rose again in the first quarter of the year. At 4.3%, this is the highest level New Zealand has seen since mid-2021; further evidence perhaps, that high interest rates are damaging job prospects. It certainly concerned those in the markets and we can see that in the GBP/NZD rate which?spiked above NZD 2.12 overnight before correcting this morning. That spike took this pair to the highest level since September 2023 and, although we have seen a little bit of profit-taking, as?at?this morning, ?GBP/NZD is only marginally below NZD 2.12 in the interbank markets. We may not know whether this weakness in the labour market is impacting the thinking within the Reserve Bank of New Zealand until they meet on the 22nd of May. However, any further poor economic data from New Zealand is also likely to weigh on the value of the Kiwi dollar.

USD gains support ahead of FOMC

It is almost inevitable that the chairman of the US Federal Reserve will announce a, ‘no change’ decision when the Open Market Committee meeting comes to an end today. It has been fairly clear over recent meetings that the US central bank intends to keep interest rates at an elevated 5.5% level for an extended period. The financial markets are generally convinced that the first interest rate cut in the US will be delivered in September. So any hints within the statement that is released by the Fed today that interest rates could be cut any sooner than that, will stop the advance of the US dollar. And it has been advancing over the last 24 hours. In the interbank markets, the GBP/USD rate has dropped to $1.2480; roughly a cent down on the high we saw on Friday. The interbank EUR/USD rate is down to $1.0660, even after yesterday's stronger-than-expected eurozone inflation and GDP data. However, many European markets all closed for the May Day holiday, so maybe that has affected the impact of the good news..?

Today's Major Economic Releases

12:15 USD ADP Employment Change(Apr)?

14:00 USD ISM Manufacturing PMI(Apr)?

18:00 USD Fed Interest Rate Decision?

18:00 USD Fed Monetary Policy Statement?

18:30 USD FOMC Press Conference?

20:15 CAD BoC's Governor Macklem speech?

Interbank Exchange Rates