The Dollar Finds Some Traction, While Bank Of Canada Highlights The North American Session

South Korean exports for the first 20 days of April underscore the recovery underway.  The headline rate of 45.4% exaggerates the gain, but even when adjusted for the number of working days, the 36% rise year-over-year is impressive.  Autos, mobile communication devices, and petroleum product shipments rose by more than 50%.  Semiconductor exports rose by more than 38%.  Exports to China rose by almost 36%, and shipments to the US rose nearly 40%.  Exports to the EU jumped 63% and a little more than 20% to Japan.  Imports rose by 31.3%.  

The dollar spent more time today below JPY108 but did not test the JPY107.75 area, where an option for around $340 mln is set to expire today.  Solid bids emerged that lifted the dollar to almost JPY108.30 by late in the Asian session before consolidating in the European morning.  The JPY108.40 offers the nearby cap, while yesterday's high was closer to JPY108.55.  The dollar has not risen above the previous session's high since April 9.  The Australian dollar traded to $0.7815 yesterday, its best level in a month, but reversed lower and tumbled a cent.  It made a marginal new five-day low today at $0.7700.  It has stabilized in the European morning, and the $0.7740-area offers resistance.  The Chinese yuan is posting small gains today, but the direction is more notable than the size of the move.  It is the eighth consecutive advance, and it is at its best level since March 18.  It is the longest rally since November 2019.  The dollar fell to CNY6.4925 today.  News that Beijing is considering aiding the beleaguered Huarong bolstered sentiment.  The PBOC's reference rate setting continues to be fairly transparent, which means predictable.  Today, the dollar's reference rate was set at CNY6.5046 (FXY, FXA, CYB).  


The March UK inflation report was in line with expectations, but consumer prices are likely to accelerate in a combination of base effect and re-opening bottleneck pressures.  The preferred measure of consumer prices that includes owner-occupied housing costs rose 1% from a year ago (0.7% in February), and the core rate rose to 1.1% (from 0.9%). The rise in clothing and footwear prices was partly blunted by a drop in food prices.  Producer output prices are accelerating and rose a bit faster than expected at 1.9% year-over-year.  However, input prices are rising even faster.  The 5.9% increase in March was well above expectations, and the February series was revised higher (3.3% vs. 2.6%). This gap is suggesting of a squeeze on margins.  Separately, we note that UK house prices are accelerating like in several other countries (Canada, Australia, New Zealand, and the US, e.g.).  The government's house price index rose 8.6% year-over-year in February,  more than anticipated, and the January series was revised to 8% from 7.5%.  

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Read more by Marc on his site Marc to Market.

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