- US data beats
- Sterling struggles
- OPEC disappoints
- JPwhy not?
The US data front received a much-needed boost this morning when GDP was revised significantly higher. Growth in the first quarter had been at a sullen 0.7% in the initial reading, but the final print today was revised up to 1.2%. Although it was the lowest reading of US growth in a year, the upward revision may settle some anxiety in markets that the malaise of the first quarter was indeed “transitory” as the Fed would have us think. Durable goods also beat analyst expectations, printing -0.7% in April versus the -1.5% expected. March’s reading was revised higher to a positive 2.3%. The positivity did little to inflate the dollar which had already been climbing throughout the morning.
The pound took a hit this morning after a YouGov poll published late Thursday showed Prime Minister Theresa May’s Conservative lead has slipped amidst a slowing economy and May’s reversal on a controversial ‘dementia tax’. This is worrisome as May called the snap elections to garner a greater majority in Parliament, but their starting line of a 24-point lead now sits at a dismal 5-point gap from Jeremy Corbyn’s Labour Party. This will make polling all the more important ahead of the June 8 election, but as Brexit showed us – polls aren’t the security blanket they used to be.
Crude oil is ending the week on a sour note, poised for the worst week since April after the OPEC meeting. An announcement that oil producers would extend production cuts another nine months disappointed investors who were hoping for more from the supplier coalition. Although prices have stabilized with a barrel of West Texas Intermediate near the $49 mark, this does raise concerns that the supply cuts may be offset by higher production in the US, where producers have been ramping up activity to fill the gap that the supply cuts drove. CAD remains unfazed, trading higher against the USD.
The seeming reluctance of the Fed to commit to hiking rates after June has pushed US Treasury yields down, and consequently taken the Japanese yen higher. JPY gained a percent against the US dollar as the 10-year Treasury note extended declines that began Wednesday. The dollar is firming in general, with the DXY dollar index erasing Fed-led declines from Wednesday to rest near weekly highs and largely ignoring better than expected data out of the US.
EURUSD: Euro taking a leg lower after spiking higher throughout the week.
GBPUSD: Sterling at a one-month low against the USD as Conservative’s lead erodes ahead of the snap elections on June 8th.
AUDUSD: Aussie dollar weaker against the greenback in the wake of a resurgent USD.
USDCAD: Canadian dollar ignoring both a stronger USD and lower oil prices to trade stronger as we head into a holiday weekend in the states.
USDJPY: Yen took a marked leg up against the USD after US treasury yields fell, but has stabilized just above 111.