North American Summary and Highlights 11 Apr
Overview - The EUR took a modest hit from the ECB but the USD ended on balance little changed.
North American session
The USD ended little changed after a choppy session. The EUR saw a modest dip on the ECB announcement of unchanged policy, with the statement suggesting that it could be appropriate to reduce the current level of policy restriction, and dropping language about maintaining rates for a sufficiently long time. EUR/USD fell around 15 pips though EUR/CHF fell 40 pips to .9750.
The EUR/USD dip was soon more than reversed as the USD slipped on a modest 0.2% rise in March’s PPI, both in the headline and core rates, even with initial claims lower at 211k from 222k. USD strength subsequently resumed, probably supported by what was generally hawkish Fed talk, most clearly from Barkin, with Williams earlier and Collins later more balanced, though still disappointed with recent CPI data. EUR/USD fell from a high of 1.0757 to touch 1.07 before recovering to mid-range as equities built gains.
The USD ended slightly firmer versus the JPY but slightly weaker versus the AUD and GBP. USD/CAD ended little changed. USD/CHF ended weaker as the CHF largely sustained its post-ECB gains.
European morning session
The USD stayed strong through the European morning session, gaining modestly against the EUR and JPY, while being little changed against the AUD, CAD and GBP. EUR/USD lost around 15 pips to 1.0730, while USD/JPY gained 30 pips to a new 34 year high at 153.29 before edging lower. GBP initially strengthened, helped by comments from MPC member Greene who said rate cuts should be some way off, although Greene is an established hawk, and GBP fell back to near opening levels after the initial gain.
The Bank of England credit conditions survey was the only other real news of note, with markets awaiting the ECB meeting. British lenders expect to see both supply and demand for mortgages to strengthen in the coming three months as the housing market strengthens further. A positive net balance of 19% of lenders expected the supply of mortgages to increase in the coming three months, the highest reading since early 2021. Lenders expected default rates for both secured and unsecured credit to rise in the coming three months.