Market Analysis: Dollar Falls on Weak Data, GBPUSD Holds Above 1.24


In today's trading session, the dollar index continues to trade lower, currently at 101.50. The pressure on the US currency was exerted by weak data on the labor market, as the number of building permits decreased by 8.8 percent against a forecasted decline of six percent. Additionally, the market is under pressure from high interest rates and significant price increases, which reduce business activity. Market participants doubt that the Federal Reserve will raise rates at the upcoming May meeting, further weighing on the dollar. The negative factor for the dollar was also the publication of strong data on Q1 GDP, which improved market sentiment.


In other news, the GBPUSD pair holds above 1.24, and the focus of investors is on the update of the UK labor market for February. The unemployment rate increased to 3.8 percent instead of remaining at the same level of 3.7 percent, while the average salary including bonuses remained at the same level of 5.9 percent, with an expected decrease to 5.1 percent, and without bonuses, it was 6.6 percent instead of the expected 6.2 percent. The growth of wages in the country worries investors as it stimulates higher inflation. The latest data may push the Bank of England to another increase in interest rates, despite the fact that earlier officials intended to pause the cycle of monetary tightening. If expectations are confirmed, and the Bank of England again allows the possibility of raising the rate, the GBPUSD pair may update the local price.


Lastly, the Australian dollar is rising for the second day in a row and is currently trading at 0.6730 against the USD. Traders are analyzing the minutes of the last meeting of the Reserve Bank of Australia, according to which officials discussed a 25 basis point interest rate hike. The regulators' board members also agreed that it would be useful to have additional economic data and updated forecasts before discussing further monetary tightening to bring inflation back to the two percent target. Additional support for the AUDUSD pair was provided by the decline of the dollar against the backdrop of weak data on the real estate market.


Overall, the main trading ideas for today's session are a continued decline of the dollar, a potential increase in interest rates in the UK, and a rise in the Australian dollar. Thank you for your attention.