The Dollar appreciated modestly across the board last week, thanks in part to some decent US macro data which point to US GDP growth having stabilised or even inched higher in Q1 from 2.2% qoq annualised in Q4 2018. This contributed to the GBP/USD cross falling below 1.30 on Friday for the first time since late March, despite the UK itself recording strong retail sales and employment data. Similarly EUR/USD lurched lower to 1.125, having traded above 1.13 at the beginning of the week, with the difference that Eurozone data, including in Germany, were on the whole weak.
The Australian Dollar was broadly unchanged in trade-weighted terms but the Kiwi Dollar fell another 0.9% to its lowest level since end-October. Market expectations that the RBNZ may be forced into cutting its policy rate were given extra impetus by data showing that New Zealand headline CPI-inflation rose by only 0.1% qoq for the second consecutive quarter in Q1. As a result the year-on-year rate fell to just 1.5%.
The Swiss Franc also yielding further ground, depreciating 0.9% to its lowest point since early August, with the safe-haven currency dragged down by buoyant global risk appetite.
Dollar
The Dollar appreciated 0.3% in trade-weighted terms but remains firmly within its narrow multi-month range. It was pushed higher by a batch of decent US macro data, including a smaller-than-expected trade deficit in February of $49.4bn, a 1.5% mom rebound in the value of retail sales in March and a rise in the New York Empire State manufacturing Index to a 4-month high of 10.1 in April.
Sterling
Sterling shed 0.4% in trade-weighted terms to a 2-month low despite evidence that decent growth in aggregate wages and tourism are fuelling retail sales. A record-high number of people were employed in February (32.72 million), up 1.4% yoy, and real weekly wages rose 1.2% yoy. The 2.6% yoy rise in aggregate weekly wages likely contributed to the volume of retail sales rising 1.0% mom in March, with the 6.6% year-on-year growth rate amplified by the weakness of retail sales (-1.5% mom) during a very cold March 2018. The 1.5% qoq rise in retail sales in Q1 was the strongest in three years and provides further evidence that UK GDP growth very likely rebounded in Q1 from a moribund 0.2% qoq in Q4 2018.
