Pound (GBP) Dented by Brexit Uncertainty
The Pound (GBP) opened this week on the back foot, relinquishing some of last week’s gains as it was dragged lower by renewed Brexit uncertainty.
This came in the wake of comments from French foreign minister Jean-Yves Le Drian, who warned that the UK and the EU would ‘rip each other apart’ in upcoming trade negotiations.
Coming up, the release of the UK’s latest jobs report is likely to be the main focus for markets today.
While the unemployment rate is expected to have held at a 44-year low in December, forecasts that wage growth will have slowed to just 3% are likely to exert some pressure on GBP exchange rates.
Euro (EUR) Stifled by Coronavirus Warnings
The Euro (EUR) traded in a narrow range on Monday in response to warnings that the Eurozone’s economy may be badly damaged if the coronavirus crisis extends into the summer.
Economists fear that any prolonged disruption will weaken trade and limit the number of Chinese tourists visiting the continent leading to a slump in Eurozone growth and potentially drag Germany and Italy into a recession.
Looking ahead, the publication of the latest ZEW economic surveys will be the main focus for EUR investors today, potentially lifting the Euro if economic sentiment improved in February.
US Dollar (USD) Muted on Presidents’ Day
The US Dollar (USD) was mostly rangebound through yesterday’s trading session, with the closure of US markets in observance of Presidents’ Day leading to thin-trading conditions.
However, demand for the safe-haven ‘Greenback’ also remained underpinned by ongoing concerns over the coronavirus outbreak in China.
USD investors will look to today’s Empire state manufacturing index for fresh impetus. Will a modest improvement in factory activity buoy USD exchange rates?
Canadian Dollar (CAD) Supported by Robust Oil Prices
The Canadian Dollar (CAD) ticked higher on Monday, with the oil-sensitive ‘Loonie’ strengthening as WTI crude consolidated its gains above $52 a barrel.
Australian Dollar (AUD) Slumps on Dovish RBA Minutes
The Australian Dollar (AUD) tumbled overnight on Monday in response to the release of the minutes from the Reserve Bank of Australia’s (RBA) policy meeting earlier this month.
The minutes were notably more dovish than the RBA’s policy statement and signalled policymakers’ readiness to cut rates if needed.
New Zealand Dollar (NZD) Drops in Risk-Off Trade
The New Zealand Dollar (NZD) also trended lower overnight as the risk-sensitive ‘Kiwi’ was dented by both the dovish RBA minutes and ongoing concerns over the coronavirus outbreak.