British pound – The pound rallied off its weakest in at least two weeks after cost pressures facing manufacturers stepped up last month. The pound earlier reached $1.6355 against the dollar but rebounded to a session high at $1.6437 after producer price input costs jumped by a greater than expected 2.6% during the month leaving the measure higher by 17.6% over a year ago. Output costs rose 0.8% in April for an annual pace of change of 5.3%, while the dumbed-down core reading of output costs rose 0.6% on the month for a 3.4% annual gain. The pound equally rose per euro to 88.44 pence.
Canadian dollar – Dealers remained cautious towards the loonie ahead of the U.S. employment report. Immediately after Statistics Canada reported a heady April gain for employment of 58,300 jobs investors drove the Canadian unit sharply higher to buy $1.0397 U.S. cents from $1.0298 in the run-up to the report. The government said the economy has now added 282,000 jobs in the space of a year while full-time positions have now surpassed the October 2008 level for the first time.
Aussie dollar – The Reserve bank released its quarterly monetary statement on Friday ramping up its inflation forecast for 2011 to 3.25% compared to its February projection of 3%. It maintained its growth estimate at 4.25%. The central bank signaled a need to raise interest rates at some point if it was going to meet its inflation-fighting objective that challenges it to maintain consumer prices between a 2-3% band. The Australian dollar reversed a portion of Thursday’s weakness against the dollar adding two cents from the day’s low at $1.0537. The Aussie remains bid, but at $1.0677 ahead of the U.S. employment report is off the session peak at $1.0734. The AiG construction performance index eased further during April to read 37.9.
Andrew Wilkinson is a Senior Market Analyst at Interactive Brokers LLC
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