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By xemarketanalysis April 26, 2018 12:02 pm
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    XE Market Analysis: Euro Weakens as Mario Draghi Says ECB is Assessing Softer Data

    OVERVIEW

    • US government yield falls back below 3%.
    • US durable goods orders rise, business spending on equipment falls. 
    • Swedish central bank keeps rates on hold, postpones rate hike.
    • BoC Governor says the economy is finally positive.

    HIGHLIGHT

    The Euro is trading at a 3-month low versus the US Dollar following the ECB meeting where Mario Draghi maintained a cautious tone on the central bank's policy. The ECB kept interest rates unchanged and it continues to inject €30bn a month into the financial system as it tries to return inflation back to its target of close to 2%. Draghi said that the governing council was assessing whether the recent softer economic data was just a normalization of growth after a period of very fast expansion, or whether it was part of a protracted slowdown.

    US DOLLAR

    The US Dollar's broader rally is continuing despite the US 10-year yield dipping back below the 3% level. Economic data released was slightly mixed as a decline in durable goods shipments suggested business spending on equipment slowed in the first quarter, but jobless claims fell to a 48-year low. 

    BRITISH POUND

    The Pound is struggling to recover its slump following Carney's comments last week, but there is also a renewed focus on Brexit with the government facing growing opposition to its plans to leave the Customs Union. The CBI said its April sales volume balance rose to -2 from March's five-month low of -8, below the average forecast of +5. Mortgage approvals were also soft, with just 37,567 granted in March. Tomorrow's GDP will be key to the Pound either holding its ground or taking another leg lower on expectations for the Bank of England's meeting next month.

    EURO

    The Euro is broadly lower after the ECB refrained from committing to ending their bond-buying program (see highlight).

    CANADIAN DOLLAR

    The Canadian Dollar has stabilized at lower levels versus the US Dollar, helped by upbeat comments on NAFTA progress and US yields having dipped back slightly. Bank of Canada Governor, Stephen Poloz, said on Wednesday the economy was "finally positive" after a long adjustment to a sharp fall in oil prices, but he added there was still softness in several areas of the country.

    AUSTRALIAN DOLLAR

    The Australian Dollar remains stuck near a 4-month low versus the US Dollar, and with inflation still under the RBA's target, risks remain for further losses for the Aussie.

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