USD

The US dollar gained ground in recent trading when risk sentiment started to favor lower-yielding currencies.

Most other forex pairs were stuck in consolidation, as traders awaited the top-tier data releases this week. US retail sales came in weaker than expected, as the core version of the report showed a flat reading while the headline figure revealed a mere 0.1% uptick. US headline and core PPI are up for release today and slower producer price increases of 0.2% are eyed.

EUR

The euro underwent another selling wave in recent trading when the Bundesbank expressed its support for further ECB easing. In an interview with the Wall Street Journal, an insider shared that the German central bank is willing to back negative deposit rates or further LTRO as the euro zone struggles to combat low inflation. German ZEW was much weaker than expected, as the index slipped from 43.2 to 33.1. Only medium-tier euro zone reports such as industrial production are due today and more signs of weakness could lead to more euro losses.

GBP

The pound was put on a weak spot in recent trading despite the lack of top-tier data from the UK. Perhaps traders are bracing for disappointment in today’s set of data, with the jobs report and the BOE inflation report lined up. Claimant count could drop by roughly 30K again in April, which should bring the jobless rate down to 6.8%. However, the bigger mover for the pound might be the inflation report, which should provide better clues on whether the central bank could be ready to tighten by the end of the year or early next year.

CHF

The franc was stuck in consolidation in recent trading, although with a few signs of weakness. There were no reports released from Switzerland yesterday and there are none due today, opening up the possibility of further consolidation for USD/CHF and EUR/CHF.

JPY

The yen took advantage of dollar weakness after the bleak US retail sales release in recent trading. It also advanced further to the euro and pound as risk appetite waned in the forex market. There were no reports released from Japan then and none are due today, which suggests that sentiment could continue to push yen pairs around.

Commodity Currencies (AUD, NZD, CAD)

Comdolls were in for mostly sideways movement thanks to the lack of major economic catalysts. Data from China and Australia were mostly weaker than expected, weighing on demand for the Australian dollar. New Zealand retail sales simply came in line with expectations, barely triggering any impact on the Kiwi. There are no reports due from these comdoll economies for the rest of the trading day.

By Kate Curtis from Trader’s Way