Price action in major currency markets was muted last week. The Dollar managed to appreciate 0.7% in trade-weighted terms but weakened slightly on Friday despite the release of stronger-than-expected US GDP growth (+3.2% qoq annualised) with analysts pointing to the weak underlying components of the release. The Dollar is now only 0.3% stronger than it was a month ago. Sterling, the Swiss Franc and Kiwi Dollar all appreciated about 0.1-0.3% last week while the Euro weakened by 0.2%, weighed down by soft German and Eurozone macro data.
The biggest loser, however, was the Australian Dollar, which shed 1.1% following the release last Wednesday of data showing that CPI-inflation had fallen sharply to 1.3% yoy in Q1 from 1.8% yoy in Q4 2018. Markets are now pricing in a 50% probability that the RBA will cut its policy rate 25bp at its meeting next week and 50bp of rate cuts over the next 12 months.
