Daily currency report

The yen fell across the board with weaker than expected Japanese growth data while the dollar drew support from fresh signs of strength in the US labour markets, knocking expectations of a near term cut in interest rates.

GBP
The pound extended its weakness, despite the lack of economic data. Although some of the selling can certainly be attributed to broad dollar strength, recent inflation data has already made the markets sceptical about further interest rate hikes, particularly in June. If consumer spending does come out weak, then the BoE has no reason to lift interest rates again in the second quarter.

USD
The US dollar staged another strong rally, strengthening against some of the majors. The Labour market is holding steady, with jobless claims remaining consistently low. Positive jobs data could continue to cushion the economy which would reduce the pressure on the Fed to reconsider their plans to leave interest rate unchanged.

EUR
The euro lost value against the US dollar, with little in the way of data aside from the ECB monthly report. The CB still feels that interest rates are moderate and remain accommodative, supporting the view that interest rates will be increased in June.

JPY
The yen is trading weaker across the board after the BoJ failed to be as upbeat about the economy as the market expected. Growth in the first quarter was weaker than expected, driving the annualised pace of growth from five per cent down to 2.4 per cent. BOJ Governor Fukui afterwards reiterated that interest rates will be adjusted gradually.