Canadian dollar drops back after BoC survey


The dollar was among the leaders, with little to choose between the top four currencies. US statistics were few. The New York Fed's manufacturing index improved by six and a half points to 10.1, with the bank noting that activity Grew "modestly" in April. There was a net $21.6 billion outflow of capital in February, which did not worry investors.

In an interview with CNBC Chicago Federal Reserve president Charles Evans said "I can see the funds rate being flat and unchanged into the fall of 2020". In the Q&A he went further, saying there would be an argument for a rate cut if core inflation were to fall to 1.5%. His observation carried less weight than it might have done had he not earned a reputation as a perma-dove. The USD was not affected.


The mixed set of European data this morning were helpful to the EUR. Euroland construction output seemed to be in good shape, increasing by 3% on the month in February, but it is not a statistic to which investors pay much attention. ZEW's surveys of investor sentiment showed a striking seven-point improvement, to 3.1, in Germany and for Euroland as a whole it also went up by seven points to 4.5.  

The EUR is 0.1% lower on the day against the USD but it was moving lower shortly after the release of the data because of a report that some on the European Central Bank's Governing Council doubt that a recovery is guaranteed during the second half of the year.


The Bank of Canada's Business Outlook survey rather spoiled the CAD's day, relegating it to the back of the field. In its preamble the central bank noted "a moderation" in demand but some commentators saw it slightly differently, one pointing out that the reading was the "lowest since 2016". The BoC said: "The main headwinds are a more uncertain outlook in the… energy sector, continued weakness in housing-related activity in some regions, and tangible impacts from global trade tensions." 

Investors could find no obvious upside in the report. It might not be the preamble to a rate cut but at best it suggests no upward move in the foreseeable future. The CAD dropped three quarters of a cent and it is 0.4% lower on the day.


With nothing happening on the Brexit front the GBP had as quiet a day as most other major currencies. It is an insignificant 0.1% lower against the USD.

This morning's UK employment data made little difference. Average basic earnings increased by an annual 3.4%, slightly less than the previous month but in line with forecast. Unemployment was steady at 3.9%


The yen did not have much to say for itself other than the easily-overlooked tertiary index, which monitors activity in the services sector. It was down by 0.6% in March, reversing the previous month's gain. The JPY is unchanged on the day.

When Bank of Japan governor Haruhiko Kuroda addressed parliament he gave little away. Like the Fed he will "patiently continue" to keep monetary policy relaxed as he strives to achieve a 2% inflation rate. In an interview with CNBC he said there is "still some room for further monetary easing if needed". Investors had heard it all before.

Sign up for a free account

Sign up for a free account

Access our convenient and secure online platform to process your international payments. Manage beneficiaries and view payment status and history at the click of a button.

Find out more
FX business solutions

FX business solutions

We provide tailored services to help companies make international payments and manage their foreign exchange risk

Find out more