The US dollar continued to thrive through the course of last week as heightened anxiety from the Euro region forced a global bid for safety. This cautious positioning remained the key theme on Friday at the expense of the Euro, Sterling and commodity bloc currencies with Spain and Greece once again the key elements. Equities from both sides of the Atlantic continued to fall under the weight of general anxiety from Europe with risk barometers the DOW and S&P500 falling 0.60 and 0.74 percent respectively. The perceived safety of U.S debt kept treasuries well-support throughout the week with 10yr yields finishing the week slightly higher after falling near to record lows on Thursday.
It’s been a succession of negative themes for commodity-contingent currencies with the Aussie and CAD posting around 2 percent losses for the week, while the Kiwi took a deeper leg-down with the NZDUSD pair losing near 4 percent for the week. Along with a treasure-trove of ratings downgrades for Spanish banks, throw into the mix the potential for a Greece departure from the Euro-zone and further signs of slowing in China and you’ve got a recipe for deep losses across the risk spectrum.
Meanwhile, a higher than anticipated Canadian CPI read failed to provide the Canadian dollar a sustained boost on Friday the USDCAD pair continuing on a north-bound trajectory for the most part of north American trade. Canadian consumer prices rose 0.4 percent in April to represent annual growth of 2 percent. Core inflation also recorded 0.4 percent growth slightly higher than the 0.2 percent estimated to represent annual growth of 2.1 percent. Despite recent hawkish language from the Bank of Canada, Friday’s inflation data is not considered the smoking gun for the BoC with inflation remaining within target.
In the absence of any top-tier local economic data, the key focus for local pundits will remain focus on the events of abroad with Europe’s debt dramas front row and centre. Amid the constant conjecture over the health economic future of Greece and Spain, growth data from Europe’s largest economy will also be a key focus in the week ahead. German Gross Domestic Product is expected to show seasonally adjusted growth of 0.5 percent in the first quarter to represent annual growth of 1.2 percent. The German IFO data series will also be closely watched alongside Euro-Zone and German PMI which are also on Thursday’s docket. Across the Atlantic, the health of U.S housing will be under the microscope this week with Existing/New home sales and house price index on the bill. Durable goods orders are expected to rebounded in April after 4.2 percent decline March and the final revision for the University of Michigan consumer confidence gauge is expected to be unchanged at 77.8 in May.