GBP/USD Buoyed by Improved Market Sentiment
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GBP/USD climbed to 1.2879, as weaker RICS Housing Price Balance data and the Bank of England’s (BoE) cautious monetary policy stance weighed on the pound. The BoE Financial Policy Committee (FPC) warned that significant shifts in global trading arrangements could potentially undermine "financial stability by depressing growth." Additionally, renewed concerns stemming from the trade tensions between the US and China continue to pressure UK business activity, leaving UK companies struggling to navigate competitive pricing. March FOMC meeting minutes and remarks from FOMC members indicated a risk of heightened inflation in the US economy and challenges for the Fed's future monetary policy direction. In upcoming sessions, key US inflation figures and the University of Michigan (UoM) Consumer Sentiment Index survey results, along with the UK's monthly Gross Domestic Product (GDP) and factory data for February, will shape the market sentiment surrounding the GBP/USD exchange rate.
AUD/JPY Struggles on China Deflation Concerns
AUD/JPY stood at 90.06, supported by renewed optimism from EU-Australia trade negotiations that supported the Australian dollar. However, weaker-than-expected Chinese CPI and PPI figures and ongoing trade tensions between the US and China continue to dampen the risk-sensitive Aussie, particularly following Trump's announcement of an immediate tariff hike on Chinese imports to 125%. While President Trump's 90-day pause on new tariffs helped mitigate some losses for AUD, declining business and consumer confidence in Australia underscored a sluggish economic outlook, reinforcing expectations for additional rate cuts by the Reserve Bank of Australia (RBA). Robust Producer Price Index (PPI) data and hawkish BoJ expectations strengthened the yen. Japan's PPI increased by 0.4% on a monthly basis and 4.2% year-on-year. Broader market sentiment around Australia's trade negotiations with the European Union (EU) and ongoing global trade concerns will shape the market sentiment around the AUD/JPY exchange rate.
EUR/USD Stabilises Ahead of US CPI Data
EUR/USD steadied near 1.0984 as investors awaited March Consumer Price Index (CPI) data from the US. Annual inflation is projected to rise modestly to 2.6%, down from February's 2.8%, while core CPI is anticipated to soften to 3%. Any significant divergence from these expectations could influence the Fed’s perspective and introduce volatility into the USD. Conversely, the euro strengthened after the German conservatives, led by Friedrich Merz, secured a coalition deal with the centre-left Social Democrats (SPD) aimed at stimulating growth in Europe's largest economy amid ongoing global trade tensions threatening recession risks. On Thursday, European Central Bank (ECB) policymaker François Villeroy de Galhau commented, "Trump's tariff pause decision is less bad news but still bad news elements out there in America." In today's session, US inflation figures and speeches by influential FOMC members will drive the EUR/USD exchange rate.
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USD/CAD Sinks Amid US Recession Fears
USD/CAD weakened around 1.4090 after Trump announced a 90-day tariff freeze. While the Canadian dollar rallied on the improved market sentiment, newly imposed 25% counter-tariffs announced by the Canadian government, effective April 9, could introduce volatility to CAD trading. Investors will also eye crude oil price movements and the upcoming snap election on April 28. Conversely, the greenback regained strength later in the session after U.S. President Donald Trump announced a 90-day suspension of most new tariffs, excluding those targeted at China. Minutes from the March FOMC meeting revealed unanimous concern among Fed officials about rising inflation risks in an already fragile economy, providing insights on the Fed's future monetary outlook. In the absence of any market-moving Canadian economic data, US inflation figures, along with crude oil price dynamics, will be the key drivers for the USD/CAD exchange rate.
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