US FX WRAP: Kiwi outperforms as G10 FX mostly gains vs. the Buck
Newsquawk Staff ·
USD: The Dollar Index slipped amid signs that President Trump is nearing a deal on Iran. The Buck is on course for a second straight week of losses, as geopolitical optimism rises. Still, some analysts continue to note that US inflation rose at its fastest pace in three years in April, driven by higher energy prices from the Iran war, giving further support to the notion that the Fed will keep rates unchanged this year, or even potentially lift them if the situation worsens. Fed officials speaking today highlighted concerns on inflation: Governor Bowman said that progress on lowering prices has stalled, and warned of growing inflation risks; Kashkari (2026 voter) said April PCE data heightened his attention to inflation risks; Paulson (2026 voter) said inflation pressures are weighing on the economy; Schmid (2028 voter) said inflation is his primary concern. Traders will be watching next week's ISM surveys for further signs on how the war is impacting corporates, while there is also the US jobs data due at the tail-end of next week.
CAD: USDCAD rose today after Canadian GDP stats significantly disappointed expectations. GDP fell 0.1% Q/Q in Q1 (exp. +1.5%), with the monthly measure for March also falling by -0.1% M/M (exp. +0.4%). It was the second straight quarterly decline. Analysts at Oxford Economics said the fall in Q1 is a function of a surge in gold imports, weaker housing investment, and a pullback in government investment in weapons systems after a large increase in late 2025. Business investment also fell, which OxEco says is a concern for the path ahead, especially as strains mount from the oil price shock, US tariffs, trade policy uncertainty and a shrinking population. "We expect large fiscal stimulus to help support renewed growth in the economy this year," it wrote, "but Canada remains on recession watch." OxEco sees growth ramping up in the second half of the year and through next year, however, underpinned by favourable USMCA renegotiation, an early end to the Middle East war, and resumption of normal commerce through the Strait of Hormuz.
NZD: A further dose of hawkish RBNZ-speak helped the Kiwi outperform its G10 counterparts; RBNZ Governor Breman said the OCR is likely to increase sooner, and by more than previously signalled to combat inflation, while Assistant Governor Silk said that although she has not yet seen strong second-round inflation pressures, she is prepared to respond aggressively if she does.
HUF: The florint strengthened after the European Commission announced that it will unfreeze EUR 16.4bln in EU funds for Hungary (EUR 10.0bln from NextGenerationEU, EUR 4.2bln tied to cohesion-fund conditions and EUR 2.2bln; the funds equal to around 13% of Hungary's annual budget). Hungary has agreed to join the European Public Prosecutor's Office, strengthen anti-corruption bodies, and amend its public procurement law.
- [MARKET ANALYSIS] Complex capped by energy; T-notes dip after Tuesday's bull-flattening
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- US FX WRAP: G10 FX peers gain vs. the Buck in risk-on trade
- US President Trump says Ukraine has to want to settle this war; want Zelensky to make a deal; given a lot to Ukraine, but gotten absolutely nothing back
- US to offer Russian President Putin face-to-face talks with Ukrainian President Zelenskyy and US President Trump, Politico reports
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