Forex today: an uneventful session although dollar supported PPI ahead of CPI tomorrow

The FX space today was pretty subdued. The DXY was pushing higher to 99.88 in a tight range and the commodity bloc was making a minor correction of the post-RBNZ sell-off. 

The BoE was a focus in markets today. The BoE held both rates and QE unchanged at 0.25% and £435B respectively. In the US shift, the pound staged a come back after falling heavily to a one-week low at 1.2848 during Governor Mark Carney's post-meeting press conference. While markets were expecting a more hawkish tone from Carney, he instead explained that the current monetary policy was appropriate and that the weak GBP was the main reason behind the rising inflation. GBP/USD has been in a range of said low and 1.2949 yielding a YTD return of 4.29% within the wide 52wk range of between 1.1841 and 1.5018.

The euro was also subdued with only a reaction to better than expected US data that took it for a walk to the downside between 1.0893 and 1.0839, only to walk its way back to 1.0860 where it sat for the majority of the session and still below the 10-d sma at 1.0921. USD/JPY was dominated by yields and US stocks, trading between 113.46 and 114.37, starting out the day bid and drifting lower as US stocks dropped back along with US yields. The 10-years are closing down over 1% within the range of 2.3874-2.4210%. AUD/USD and NZD/USD consolidated the RBNZ sell-off with kiwi correcting to 0.6827 lows to make a high of 0.6960 and the Aussie 0.7351 to 0.7380. USD/CAD was two-way business between 1.3680 and 1.3769.

In data, the weekly unemployment claims fell to their lowest in 28 years in the week ending May 6th, down to 238,000 vs 245K expected and the previous 238K. The Producer Price Index painted an inflationary environment for the US economy printing 1.9% in April vs the previous 1.6% for March. Markets now await US CPI and US retail sales tomorrow.

The day ahead

A handful of low tier events including NZ Business PMI.

Key notes from the US session

• Moody's: U.S. economy has returned to full employment; the last time labor was fully employed was a decade ago - Reuters
• AUD/USD intermarket: finding support from a 2% rise in London copper prices
• GBP/USD: three reasons for a bullish outlook - Nomura
• US PPI: Signals of stronger inflation pressures - Wells Fargo