Pound (GBP) Lifted by Carney’s Words of Confidence
The Pound (GBP) enjoyed some modest support on Tuesday, buoyed by comments from Bank of England (BoE) Governor Mark Carney, who said the BoE was ready to tackle the threat posed by the coronavirus.
GBP investors also welcomed the publication of the UK’s latest construction PMI yesterday, as the construction sector registered its first expansion in over a year in February.
Coming up, Sterling may attempt to extend its recovery this morning if the final services PMI confirms the all-important service sector grew at a robust pace last month.
Euro (EUR) Weakens, Germany Reluctant to Increase Spending?
The Euro (EUR) ticked lower yesterday, giving up some of its recent gains amid concerns Germany’s fiscal response to the coronavirus may be limited in scope.
Further weighing on the single currency was the publication of the Eurozone’s consumer price index, which revealed inflation slowed from 1.4% to 1.2% in February.
However, the Euro may look to claw back some ground this morning, with economists forecasting the Eurozone’s latest retail sales figures will reveal a bump in sales growth in January.
US Dollar (USD) Slumps as the Fed Issues Emergency Rate Cut
The US Dollar (USD) fell yesterday in response to the Federal Reserve’s decision to slash interest rates as an emergency measure to protect against the coronavirus.
The cut, coming two weeks before its next official meeting, came as a major shock to markets and saw the ‘Greenback’ relinquish some of the gains made after the lukewarm response to G7 finance ministers’ pledge to protect the global economy from the coronavirus.
However, the US Dollar may look to rally today if the ISM non-manufacturing PMI reports that the US service sector continued to expand at a healthy pace last month.
Canadian Dollar (CAD) Slumps ahead of BoC Rate Decision
The Canadian Dollar (CAD) trended lower on Tuesday, with the oil-sensitive ‘Loonie’ failing to secure support in spite of WTI crude prices rallying by over 2% through the session.
Looking ahead, this downtrend in CAD exchange rates may persist today if the Bank of Canada (BoE) follows the lead of other central banks in lowering interest rates.
Australian Dollar (AUD) Rallies on Stronger-than-Expected GDP Figures
The Australian Dollar (AUD) pushed higher overnight on Tuesday as markets welcomed Australia’s latest GDP print.
Data published by the Australian Bureau of Statistics (ABS) revealed domestic growth accelerated by 0.5% in the fourth quarter, beating forecasts growth would slow to 0.3%.
New Zealand Dollar (NZD) Rises on USD Weakness
The New Zealand Dollar (NZD) also strengthened overnight, with the slump in the US Dollar (USD) following the Fed rate cut helping to boost the appeal of the ‘Kiwi’.