EUROPEAN FX UPDATE: USD attempts to claw back some of yesterday's losses

USD: DXY +0.2%; 99.13

• USD is attempting to claw back some of yesterday's losses that were in part driven by a soft outturn for Dallas Fed Manufacturing data. On the trade front, US President Trump is expected today to announce measures to soften the impact of his automotive tariffs by preventing duties on foreign-made cars from stacking on top of other tariffs, according to WSJ. As the week progresses, greater attention will likely fall on the US data slate with today's docket including JOLTS and Consumer Confidence metrics. Furthermore, Q1 GDP and monthly PCE are due tomorrow, ISM manufacturing on Thursday and NFP on Friday. Given recent Fed comms, increased focus will be on hard data. DXY has risen as high as 99.31 but is yet to venture near yesterday's best @ 99.83.

EUR: EUR/USD -0.2%; 1.1393

• EUR/USD has faded some of its recent gains and failed to sustain the 1.1400 status with recent price action largely driven by moves in the greenback. Newsflow out of the Eurozone has been on the light side, whilst the main data highlight has come in the form of Spanish CPI metrics which printed hotter-than-expected on a Y/Y, M/M and core basis. Note, prelim Q1 EZ GDP and monthly CPI metrics are due for release on Wednesday and Friday respectively. From a policy perspective, recent source reporting has suggested that a consensus is forming on the GC for a cut in June, but there is no appetite for a larger 25bps move. EUR/USD is currently contained within yesterday's 1.1329-1.1425 range.

JPY: USD/JPY +0.3%; 142.44

• USD/JPY marginally rebounded from support around the 142.00 level after sliding yesterday owing to the early initial risk aversion and lower US yield environment but with the recovery limited in the absence of Japanese participants. Focus ahead for the week is on the upcoming BoJ policy announcement with policymakers widely expected to stand pat on rates. Sources recently noted that the BoJ is likely to keep its rate-hike signal intact despite Trump tariff risks. Elsewhere, reporting by Fox Business suggests that the hold-up in the Japan tariff deal is due to the level of commitment to buy oil from the Alaska pipeline. USD/JPY has ventured as high as 142.57 but is some way off yesterday's opening level @ 143.57.

GBP: GBP/USD -0.2%; 1.3414

• GBP a touch softer after yesterday's session of outperformance which didn't appear to be driven by any obvious catalyst. In terms of UK newsflow, the White House Press Secretary said trade talks with the UK are moving in a very positive way. However, it is worth noting that positive mood music out of the White House does not necessarily equate to expectations that a deal will actually be reached. For today's docket, BoE's Ramsden is due to speak at the Innovate Finance Global Summit @ 10:40BST. Overnight, Cable matched its YTD high printed yesterday @ 1.3444 before pulling back.

Antipodeans: AUD/USD -0.2%; 0.6418. NZD/USD -0.2%; 0.5968

• Both softer vs. the greenback amid a lack of pertinent newsflow out of Australia and New Zealand. That will change tomorrow for AUD with Australian Q1 CPI due on deck with desks expecting a moderate rebound from the subdued Q4 print. As it stands, markets assign a 94% chance of a 25bps RBA rate cut later this month. AUD/USD briefly hit another YTD peak overnight @ 0.6449. If upside resumes, focus will be on a test of the 200DMA @ 0.6463. Focus to the upside for NZD/USD is on a retest of 0.60; YTD high sits @ 0.6029.

CAD: USD/CAD U/C; 1.3826

• CAD in focus after Canada's ruling Liberals, led by Mark Carney, won the national election. However, the outcome was closer than predicted by polls and will require the party to form a minority government. Accordingly, initial support for CAD has faded as markets reprice away from expectations of a majority government. ING writes that greater direction for USD/CAD is currently provided by events in the US and the USD leg of the equation. Focus on the trade front for Canada will be on PM Carney's efforts to diffuse trade tensions with the US and how combative a stance he takes against US President Trump. USD/CAD currently sits towards the bottom end of yesterday's 1.3816-92 range.

29 Apr 2025 - 10:00- ForexData- Source: Newsquawk