Inflation Down in April, Could Shake Dollar

Canadian inflation figures this morning missed expectations, as year-to-year Core Consumer Price Index data printed at 1.3% while Headline CPI figures released at 1.6%, previous were 1.7% and 2.0% respectively. WTI Crude fell to $50.59 U.S. per barrel with support at $50.17 and $49.61 while resistance is seen at $51.19 and $52.11. Technical factors have been driving the price in oil, as production forces remain in place that will support a rise.

The Canadian dollar has mirrored the decline in oil this week with the lack of fundamentals. The loonie should maintain its range as the Bank of Canada was signaling its concerns on growth fundamentals through the balance of 2017. U.S. data today will come out mid-morning at 9:45 with Markit Service Purchasing Managers Index and Markit Composite PMI, which are both forecasting just slightly above previous readings of 52.8 and 53 respectively. At the same time, U.S. Manufacturing PMI will release with expectations of 53.5 while previous was sighted at 53.3. At 10 a.m. Existing Home Sales and Existing Home Sales Change are expected at 5.6 million and 2.5% respectively and are both above previous month. The U.S. dollar remains well supported.

Experts expect a range today of $1.3451 to $1.3525

The theme of the day on the fundamental front is PMI in April. Manufacturing, Composite and Services PMI in France and the euro-zone printed better than expected. Germany had mixed results with only Manufacturing PMI outperforming while Services and Composite PMI fell short of expectation. The European Central Bank is still adamant about keeping monetary policy unchanged. Citizens of France will hit the polls this Sunday for the first round of elections. The euro is currently trading at $1.4429.

Investors expect a range today of $1.4395 to $1.4498

U.K. Retail Sales in March was a disappointment, as it printed at -1.5% m/m and 2.6% y/y when expectations were for -0.5% m/m and 3.8% y/y. This supports the narrative that rising inflation is cutting into consumer spending. The pound sterling is still inching higher and currently trading at $1.7271.

Experts expect a range today of $1.7215 to $1.7317

The Australian dollar is quiet today as it trades relatively flat. The commodity currency got some support yesterday on the back of recovering base metal prices. However, the momentum seems to have lost steam going into the North American market open today. Main risk event will be next week’s domestic CPI release as it will be a crucial data for the Reserve Bank of Australia outlook.

Oil (WTI): $50.85 U.S. per barrel

Gold: $1,283.77 U.S. per ounce

Silver: $17.86 U.S. per ounce

Copper: $2.5377 U.S. per tonne

Dollar Index: 99.92

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