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US dollar drops to two-week lows on US economy concerns

currency-newsUS dollar drops to two-week lows on US economy concerns
The US dollar fell to two-week lows against its major rivals yesterday after concerns over the US economy’s resilience sapped USD demand.

This morning, the pound is ticking higher on better-than-forecast retail data. GBP/EUR has risen to €1.1800 and GBP/USD is firming at $1.2481. GBP/CAD is posting modest gains at C$1.5978, although GBP/AUD and GBP/NZD are falling to AU$1.7696 and NZ$1.9484, respectively.

Later today we have the eurozone’s flash consumer confidence report for May. If morale remains low, the single currency could struggle.

What’s been happening?

The pound had mixed success yesterday, showing some resilience despite a risk-off market mood.

A larger-than-forecast rise in UK manufacturing output could have supported Sterling, although UK manufacturers also reported plans to hike prices and a large drop in confidence.

Similarly, the single currency rose against its weaker peers while wavering against its stronger rivals.

A sell-off in European stock markets caused some turbulence for EUR. However, a hawkish tone from the European Central Bank’s (ECB) April meeting minutes supported the euro.

Meanwhile, the US dollar plunged to two-week lows amid US economic fears.

US retail giants reported underwhelming earnings, which investors took as a warning sign that the American economy is heading for some rough weather. In addition, initial jobless claims rose by more than forecast. As a result, the US dollar slid.

What’s coming up?

This morning, month-on-month UK retail sales showed unexpected growth in April, which is lending the pound some support.

In addition, an improvement in the European market mood may support EUR and GBP while putting further pressure on the safe-haven US dollar.

The euro could face headwinds later on today, though. May’s flash consumer confidence report for the eurozone is forecast to reveal that consumer morale remains low. Such a result could hurt the single currency.
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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