Pound (GBP) Tumbles on No-Deal Brexit Fears
The Pound (GBP) took a sharp dive yesterday as markets responded poorly to the publication of the UK’s mandate for trade negotiations with the EU.
Outlining the UK’s stance, Chancellor of the Duchy of Lancaster Michael Gove reaffirmed the UK government’s refusal to accept EU regulations after Brexit.
What was most worrying for GBP investors however was the inclusion of a threat to walk away from trade talks in June if the government feels it will be unable to secure the deal it wants, something which greatly increases the odds of a no-deal Brexit.
Coming up, expect the Pound to remain on the back foot today if a speech by the Bank of England’s (BoE) Andy Haldane discusses the possibility of a rate cut.
Euro (EUR) Rallies on German Stimulus Hopes
The Euro (EUR) roared higher on Thursday, rallying in response to speculation Germany could be gearing up to implement some fiscal stimulus to help buoy domestic growth.
Also reflecting well on the single currency was the publication of the Eurozone’s latest economic sentiment index, which unexpected jumped from 102.6 to 103.5 this month, its highest reading since May last year.
Looking ahead, will a robust inflation estimate from Germany this afternoon help the Euro close the week on a high?
US Dollar (USD) Weakened by Fed Speculation
The US Dollar (USD) was in a bearish mood yesterday, falling heavily against the majority of its peers as ongoing fears over the coronavirus outbreak stoked expectations the Federal Reserve could cut rates in the near-term.
This speculation was stoked by former Fed Chair Janet Yellen, who warned a global pandemic could lead to a US recession.
Also limiting the appeal of the ‘Greenback’ was data showing a slump in US durable goods orders last month, despite the decline in question being more modest than economists had predicted.
Coming up, the release of today’s PCE price index could keep the pressure on the US Dollar this afternoon if the Feds preferred indicator for inflation points to a slowing of price growth last month.
Canadian Dollar (CAD) Slumps amid Oil Rout
The Canadian Dollar (CAD) tumbled on Thursday, with the oil sensitive ‘Loonie’ being shunned as coronavirus fears saw WTI crude collapse roughly 5% to a fresh one-year low.
This downtrend in CAD exchange rates looks set to persist today as economists forecast Canada’s latest GDP figures will show domestic growth came close to stagnating in the last quarter of 2019.
Australian Dollar (AUD) Nosedives amid Stock Market Rout
The Australian Dollar (AUD) fell sharply overnight on Thursday as markets were in a decidedly risk-off mood. Ongoing panic surrounding the coronavirus has put global stock markets on track for their worse sell-off since 2008.
New Zealand Dollar (NZD) Plummets in Risk-Off Trade
The New Zealand Dollar (NZD) was also in freefall overnight as investors shunned the risk-sensitive ‘Kiwi’ as traders grow increasingly jittery over fears the coronavirus could trigger a global recession.