The US dollar seesawed in a familiar range and looked for a session catalyst in US data on the jobs and housing markets. Global markets nursed a subdued bias following disappointing manufacturing news from Asia and Europe. Meanwhile, Greece seemed no closer to securing much-needed rescue money to help stave off default and removal from the euro. A surprise fall in UK consumer spending in March briefly pulled the pound. Sterling has flashed remarkable resilience of late but remained vulnerable to election uncertainty with Britain’s May 7 vote now two weeks away. Dovish remarks from a top Reserve Bank of New Zealand official hinted at an elevated likelihood of a rate cut in the months ahead. The week is off to a better start for the US economy following news of a sharper-than-expected rise in existing home sales.
Euro
Euro gains against the pound buoyed it against the greenback. The fundamental backdrop in Europe though grew a little weaker in disappointing manufacturing surveys which should limit gains for the euro. Manufacturing unexpectedly slowed in Germany and France in March which caused the broader 19-country economy to do the same. Many appear to be betting on Greece to weather its current cash crisis and avert default and an exit from the euro. The situation remains fluid and uncertain so if Greek bailout talks should take a dramatic turn for the worse, the euro’s resilience would leave it prey to a steeper fall.
Sterling
Sterling squandered a five-week high and briefly surrendered against the dollar after UK consumers unexpectedly misplaced their wallets in March. Retail sales unexpectedly fell 0.5 per cent last month compared to forecasts of a 0.4 per cent gain. The pound’s resilience shows how a fair amount of election uncertainty has been priced into its exchange rate. The big vote looms in two weeks, so the pound’s hold could prove a bit slippery.
US dollar
The dollar kept on a mixed footing after weekly jobless claims unexpectedly inched up. The forecast called for an improvement but claims’ underlying trend remained positive, having kept below 300,000 for the seventh time in as many weeks. The dollar’s inconsistent bias of late shows how market players are weighing many factors and positioning ahead of a flurry of action next week. The coming week brings first quarter growth from the US and UK, and an always important decision by the Federal Reserve on April 29, which could make or break the case for a June interest rate hike.