Dollar attempts to recover

The US dollar edged up and showed some signs of trying to pause the recent slide against the major currencies. Eurozone bond yields are mainly firmer, especially in Greece where 10-year bond yields are up 25bps on the day after the IMF said a deal on further support was a long way off amid renewed scrutiny on recent negotiations.

Commodity prices (gold, copper, crude) are broadly softer so far and account for some of the relative underperformance of the Aussie, kiwi and loonie.

EURUSD traded around $1.1385. ECB Governor Praet said the central bank will “continue to act forcefully” to secure its inflation objectives, helping dampen the euro’s recent rebound. Renewed focus on Greece and negotiations with creditors may also be weighing on EUR sentiment at the margin following the Greek prime ministers’ letter to IMF head Lagarde which questioned whether participants in negotiations were acting in “good faith”.

Data releases earlier today showed weaker than expected Eurozone PPI for March (minus 0.7% versus minus 0.5% forecast), weaker than expected Sentix
Investor Confidence (2.7 versus 7.0 expected) and unchanged EZ unemployment in February (10.3%).

The UK Market/CIPS Construction PMI was unchanged at 54.2 in March, the lowest reading in nearly a year. A sub-index revealed that residential construction dropped sharply in the month (50.3, from 53 –the weakest reading since mid-2013), however.

Markit suggested that “heightened uncertainty about the business outlook” had weighed on UK construction. This is perhaps a manifestation of the uncertainties that the “Brexit” issue is having on UK activity. GBPUSD briefly tested the $1.43 level before falling.

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