FX Update: The dollar has remained buoyant
FX Update: The dollar has remained buoyant, posting a new two-month high versus the pound, a seven-week peak against the Canadian dollar, and a six-week high in the case against the Australian dollar, which dove 1% against most currencies following weaker than expected CPI data out of Australia, which catalysed expectations for the RBA to cut interest rates as soon as its May-7 meeting. The USD index remained buoyant, although off the 22-month high seen yesterday. EUR-USD saw a down-and-back-up price action, diving to a intraday 1.1194 low following the release of the April German Ifo survey before quickly rebounding back above 1.1200, printing an intraday high at 1.1223. The data showed an unexpectedly decline to 99.2 in the headline business climate reading, down from 99.6 in March and confounding the median forecast for a rise to 99.9. This follows last week's release of disappointing preliminary Eurozone PMI survey data for April. Coupled with fresh pressure coming on Italian bonds ahead of S&P Ratings review of Italian sovereign debt later this week, the backdrop should keep the euro a sell-into-strength trade. Elsewhere, USD-JPY continued to oscillate in a narrow range in the upper 111.0s, lacking directional impulse. AUD-USD dove by 1%, the biggest one-day drop in nearly four months, to a six-week low at 0.7027. Early-March lows at 0.7003-05 are now back in range. Australian Q1 CPI came in at 0.0% against the median forecast for 0.2%. The U.S.calendar is quiet today, though a mix of record high closings on Wall Street yesterday and a favourable yield differential dynamic should keep the Dollar underpinned.