With the US in the depths of the earnings seasons, it’s noticeable once again the extent to which the dollar has been impacting some of the biggest US companies. The dollar index was up nearly 9% during Q1, following on from the substantial gains of the second half of 2014. The recent Fed minutes showed the extent to which the US currency is featuring in the Fed’s thinking. As we’ve said before, the extent of the dollar rally seen since the middle of last year is unprecedented in the era of fully floating exchange rates, so we should not be that surprised that it’s causing some pain on the bottom line.
The dollar itself was under pressure yesterday, more so against the single currency and yen,less so against sterling. We remain in a much more consolidative pattern in the bigger picture, the support from the Fed outlook having waned, both from a momentum perspective and also on the fact that expectations for the first Fed move have been pushed to later in the year.
For today, we have the German IFO data at 08:00 GMT, with markets expecting a further push higher on the headline index to 104.5. There are also further meetings with respect to Greece, but the single currency is pretty much immune to the headlines here, waiting for a resolution one way or the other. US durable goods data is seen later in the day.