British pound – The pound rebounded against both its continental counterpart and the greenback after a first-quarter growth rebound that met market forecasts. The 0.5% expansion of Britain’s GDP in the three-months ending in March compares to a contraction of the same amount in the previous period. The boost came from growth across the service sector where a 0.9% change marked the fastest since 2007. The euro eased to 88.58 pence while the pound reached a session high at $1.6581 against the dollar before paring gains.
Canadian dollar – The Canadian dollar has so far failed to cling to earlier strength and is a little weaker against the greenback at $1.0478 U.S. cents. The loonie is caught between a rock-and-a-hard place at present. Voracious risk appetite has lifted global stocks to multi-year peaks as earnings keep rolling in above forecast. That’s typically a boon for higher-yielding currency, which in the case of the Canadian dollar keeps it in the growth-sensitive camp. However, the concern for the economic health of its biggest trading partner means that better investment alternatives are available elsewhere in the world. But as crude oil and metals prices continue to reflect health around the world, the Canadian is largely well-positioned.
Aussie dollar – First-quarter inflation data was a little awkward for the Reserve Bank to swallow in today’s report. The 1.6% pace of increase for the quarter was the highest in five years and leaves the annual pace of increase running at 3.3% after a 2.7% pace through December. Granted, the latest reading might not yet fully reflect the central bank’s full policy restriction having lifted its monetary policy to 4.75%, and at least some of the rise in consumer prices is skewed by a surge in energy costs. Investors bought the Aussie dollar after today’s report assuming that the RBA was more rather than less likely to tighten policy as a result of witnessing inflation burst through the 3% ceiling even temporarily. The Aussie ran to yet another record peak at $1.0852 U.S. cents immediately after the reading and subsequently calmed to $1.0824.
Andrew Wilkinson is a Senior Market Analyst at Interactive Brokers LLC
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