Rising U.S. Treasury yields are lifting the dollar against its peers Friday morning. Poor Eurozone data is weighing on the euro, while dovish comments by Bank of England’s Mark Carney takes the pound to two-week lows.
Carney cuts sterling down
After reaching multi-year highs Tuesday, the pound just keeps getting cut down. First by poor economic data, and now by comments from Bank of England Governor Mark Carney.
GBP/USD hit a high of 1.437 Tuesday morning before dropping on poor wage data in the U.K. Then, inflation came out lower than expected Wednesday, instantly pushing the pair nearly 100 pips lower to 1.418. And just as it was starting to tick upward, Thursday’s U.K. retail sales brought down the sterling again.
Despite the key data missing expectations, most investors were still pricing in an interest rate hike at the BoE’s May meeting. However, Carney put the likelihood of an increase in question Thursday during an interview with the BBC at the International Monetary Fund meeting in Washington, D.C.
Carney said that the BoE’s monetary policy committee will make its rate decision “conscious that there are other meetings” at which they could act this year. The comment cut the chances of a rate hike from 80% to 50%. Carney did say a hike is likely this year.
GBP/USD dropped from 1.419 to 1.408 on the news and is now trading down at 1.403 Friday morning.
Comments from BoE policy maker Michael Saunders Friday arguing that a hike is needed did little to help the pound’s slide.
Treasury yields lifting dollar
The dollar is extending its four days of gains Friday morning on with the help of rising U.S. Treasury yields, which are on track for its largest five-day surge since February.
The 10-year yield steadied at 2.92% Friday morning, but it’s still helping the dollar gain against other major currencies. Investors are focusing in on the 3% mark.
EUR/USD extended its losses Friday morning, trading just under 1.23. The pair dropped early Friday during the European trading day after worse-than-expected German producer price index.
The PPI miss adds to poor Eurozone inflation on Wednesday and a lower-than-expected German ZEW sentiment index Tuesday.
Canadian inflation miss boosts USD/CAD
The USD/CAD pair shot up nearly 100 pips after Canadian consumer price index missed expectations on all measurements.
USD/CAD was trading around 1.263 before the release and then spiked to 1.271, where it’s hovering now.
CPI for the month of March rose 0.3% month over month, compared to 0.4% estimates. Year over year, the CPI increased 2.3%, compared to an expected 2.4%. Bank of Canada Core CPI also missed expectations by 0.1%, coming in at 1.4%.
Retail sales released at the same time were mixed. For the month of February, retail sales increased 0.4% month over month, compared to 0.3% expected. Retail excluding autos remained flat month over month, missing estimates of a 0.3% increase.
Dollar gains on JPY
The USD/JPY pair is hitting a weekly high after a Japanese inflation failed to generate excitement, and as the dollar continues to extend its gains from rising Treasury yields.
USD/JPY is trading at a high of 107.7 after jumping above the 107 midpoint overnight. Japanese CPI hit estimates.
The dollar has been able to gain on the Japanese yen this week due to simmering trade tensions and hopeful progress between the United States and North Korea. News of CIA Director Mike Pompeo’s secret trip to meet with Kim Jung Un gave the pair a boost on Wednesday.