Global Themes

America’s dollar was mostly steady in central bank-driven trade on Thursday. Policy decisions today in Japan, the euro zone and Sweden are among the chief drivers of currencies. The yen flirted with one-month lows after the Bank of Japan left its rock-bottom interest rates unchanged and sketched a slow but steady recovery. The euro had little reaction to the ECB’s decision to keep monetary policies unchanged despite mounting signs of an economic revival taking shape in the 19-nation bloc. The president of the ECB, Mario Draghi, speaks shortly, remarks that could stir FX volatility. The big loser of the day was the Swedish crown which plunged from February highs after the Riksbank unexpectedly boosted monetary stimulus. Forecasts call for constructive U.S. data today on weekly jobless claims and durable goods. But forecasts call for less rosy economic news Friday when the U.S. releases its first quarter report card.

EUR

The euro rallied toward five-month highs after ECB boss Mario Draghi acknowledged that the bloc’s recovery was showing signs of becoming ‘increasingly solid.’ Mr. Draghi’s bullish tones suggested the central bank may not be far from scaling back stimulus. Still, the ECB ultimately decided today to leave its base interest rate at zero and left the door open to strengthening stimulus if underlying inflation fails to pick up in a meaningful way.

GBP

Surprisingly bullish news on the U.K. consumer launched the pound to fresh highs – its strongest in nearly seven months. A gauge of retail spending showed a surprise jump to the strongest since 2015 in April, which allayed fears of a consumer-led slowdown with inflation trending higher. For the pound to sustain its gains, data Friday on U.K. growth over the first quarter would need fare no worse than expected. Forecasts expect that the economy downshifted to a 0.4 percent pace of growth from the fourth quarter’s 0.7 percent rate.

JPY

The Bank of Japan announced a policy decision Thursday that offered little to lift the yen above its lowest levels in nearly a month. The BOJ left its base interest rate at minus 0.1 percent and sketched a slow but steady outlook for growth in the world’s No. 3 economy. The bank hopes that the Tokyo Games in 2020 will be positive for growth over coming years. Officials also remained wary about geopolitical risks that add to downside risks facing the economy which can strengthen the yen through safe harbor flows, a scenario that would bode bearishly for export-driven growth.

CAD

A tumultuous week for the loonie and peso eased on Thursday after President Trump played down reports that the U.S. was mulling an immediate exit from NAFTA, a chief source of North American growth. It’s been a bruising week for the Canadian currency which has fallen to 14-month lows after Washington announced tariffs on lumber exports from Canada. Mix in weaker commodity markets and it’s no surprise to see both the loonie and peso underperform.

USD

Underwhelming news on the U.S. economy should do little to lift the dollar out of its general funk. Durable goods rose 0.7 percent in March, short of forecasts of a 1.2 percent increase. The gauge of business spending also rose in lackluster fashion. Weekly jobless claims jumped 14,0000 to 257,000 but the less volatile four-week average notched a two-month low. The data cemented expectations that the U.S. economy got off to a slow start to the year.

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