EUR climbs further; GBP unable to gain momentum

Tuesday’s dovish comments from Federal Reserve Chair Janet Yellen continued to weigh on the US Dollar (USD) even on Thursday. The USD weakness, however, took a pause on Thursday amid muted price-action on the back of month-end and quarter-end rebalancing flows.

Euro-zone CPI uptick supports Euro

In the European session, investors confronted a slew of inflation estimates from France, Spain, Italy along with the composite Euro-zone CPI. According to the figures released today by Eurostat, the statistical office of the European Union, the flash estimate of Euro-Zone’s Consumer Price Index (CPI) suggested downward pressure on the region’s consumer prices easing a bit in March, but still but remained in negative territory. The preliminary headline reading showed the composite Euro-zone CPI dropping at an annualized rate of 0.1% as compared to a decline of 0.2% in the previous month. Meanwhile, the core CPI reading (which excludes volatile food, energy, alcohol, and tobacco) surpassed consensus estimates of 0.9% by printing 1%, up from 0.8% recorded in February.

Although the figure indicates that European Central Bank (ECB) continues to struggle in lifting region’s inflation closer to its medium-term target of just below 2%, the improvement in month-on-month reading and the pick-up in core inflation rate would still detriment speculations of additional monetary easing by the ECB.

Following the release, EUR/USUD moved higher and is now inching closer towards 1.1400 mark handle.

UK GDP revised higher; Current account deficit shot-up

From UK, the UK Office for National Statistics (ONS) revised country’s economic growth for the final quarter of 2015. ONS data showed Britain’s economy grew 0.6% in Q4, slightly faster than the second estimate of 0.5%. Growth for 2015 as a whole was also revised to 2.3% from a previous estimate of 2.2%.

Meanwhile, nation’s current account deficit in the fourth-quarter soared to a record high of 32.7 billion pounds, up sharply from 20.1 billion pounds in the third-quarter. With looming uncertainty over the referendum on European Union membership in June, a sharp rise in UK’s current account deficit poses additional risk to country’s financial system and the broader economy making it even more difficult to finance the deficit.

Immediately after the final revision of the Q4 2015 UK GDP, GBP/USD recovered from a daily low, but failed to decisively extend momentum beyond 1.4400 mark.

US data to watch

Investors now turn their focus on the weekly US unemployment claims and Chicago manufacturing PMI data for further trading cues ahead of the very important US month jobs report on Friday.

Dovish Yellen comments have increased USD vulnerability to further downside, thus prompting investors to cover their favourable bets on the greenback. A surprisingly strong employment number could be the only reason to trigger fresh USD buying interest.