Dollar Continues to Recover; Volatility Falls

 

USD

The U.S. Dollar is trading much better overall, gaining across the board for the first time in the last few weeks. Indeed, the “buck” has been on a weakening trend since April 7th per the Bloomberg Dollar Spot Index. Asian markets dwindled with commodities suffering throughout overnight sessions as demand from China declines in the midst of oversupply. The greenback seems to be a safer bet along with Euro as volatility in markets has dropped to its lowest level since 1993 according to the VIX (Volatility Index). Since the risk events of elections in the Netherlands and France have now passed, waters a calmer for now.

There is no major data slated for today other than job openings, but likely it will be a quieter day than some we’ve had recently as Europeans digest a new leader while concerns build over the situation in Italy and ongoing refugee crisis in the continent. Mexican Peso and Canadian Dollar are likely to stay subdued with the current rout in commodities and further evidence of an oil glut affecting prices.

 

AUD 

The Australian dollar continues to languish against the U.S. dollar and fell to a 4-month low overnight. The Aussie has been under pressure as the price of iron had been in a free-fall. The currency fell further after disappointing retail sales weakened the outlook for the nation. First quarter sales fell 0.1% month over month, missing estimates for a 0.3% rise.

 

GBP 

The Sterling was slightly lower against the U.S. dollar overnight despite the release of decent retail sales. Sales rose strongly last month, compared with April last year, according to the British Retail Consortium. The 5.6% gain in sales was the strongest reading since 2001.

The Bank of England is set to meet on Thursday and it is widely expected the central bank will keep its current policy on hold. However, we will be looking for signs of a split amongst voters. At the latest meeting in March, one voting member dissented in favor of tightening rates.