The U.S. dollar continued to fall overnight as European equities ticked higher, sapping demand for the U.S. dollar as a safe-haven. The U.S. dollar index is poised for its fifth monthly drop. The Swiss Franc traded to a record high against the greenback after Swiss central bank President Philipp Hilderbrand hinted at higher interest rates to reign in inflation and strong economic data boosted demand for the currency. Switzerland’s leading indicator unexpectedly increased to the highest since August 2006, signaling the economy is gaining momentum. Meanwhile, the U.S. economic docket showed consumer spending in the U.S. climbed in March as Americans spent more on food and fuel, indicating further income gains are needed to boost the biggest part of the economy. Purchases rose 0.6% after a revised 0.9% gain the prior month, according to the Commerce Department. Personal income climbed 0.5%, more than projected. Nevertheless, expect the dollar to continue to trade on its back foot against most of its counterparts.
The Euro maintained its monthly rally versus the U.S. dollar as the region’s inflation accelerated to the fastest pace in two and a half years, adding to signs the recovery is gaining momentum. Price pressures in the 17-nation euro region quickened to 2.8% in April from 2.7%, the European Union’s statistics office in Luxemburg said today in an initial estimate. Europe’s seasonally adjusted jobless rate held at 9.9% in March, the lowest since January 2010. A separate report showed an index of executive and consumer sentiment slipped to 106.2 from 107.3 in March, the sharpest drop since May 2010.
The Japanese yen pushed higher versus the U.S. dollar even after the U.S. released better than expected consumer spending and personal income data. The yen fell to the lowest level against the Euro since December 2009. Japanese markets are shut today for a public holiday and Japan will be closed most of next week for the celebration of Golden Week.
The British pound gained modestly overnight on general U.S. dollar weakness as European stocks continued to push higher. However, expect the sterling to remain in tight ranges as the United Kingdom is closed for the wedding of Prince William and Kate Middleton.
