Pound (GBP) to Rally on Better-than-Expected GDP Figures?
The Pound (GBP) remained on the back foot yesterday as investors were uncertain about the UK government’s lockdown plan, despite welcoming Chancellor Rishi Sunak’s extension of his job retention scheme.
Also limiting Sterling’s appeal on Tuesday were ongoing Brexit jitters, with investors growing increasingly concerned about the prospect of a no-deal Brexit as trade talks between the UK and EU show little signs of progress.
Meanwhile, the Pound is making tentative gains this morning after the UK’s latest GDP estimate revealed first quarter growth was slightly stronger than economists had forecast as the UK economy suffered its worst contraction since the financial crisis.
Euro (EUR) Bolstered by USD Weakness
The Euro (EUR) strengthened on Tuesday, with the single currency capitalising on the broad sell-off of its most traded pairing, the US Dollar (USD).
However, these gains were capped by concerns of Europe potentially suffering a second wave of the coronavirus outbreak as more countries begin to reopen their economies.
Coming up, the could Euro relinquish ground today as the Eurozone’s latest industrial production figures are expected to report a dramatic drop in factory output in March.
US Dollar (USD) Slips on Weaker-than-Expected Inflation
The US Dollar (USD) trended lower through yesterday’s session as a larger-than-expected drop in US inflation placed some bearish pressure on the ‘Greenback’.
Further weighing on USD exchange rates was fresh speculation the Federal Reserve might be forced into cutting interest rates below zero this year.
USD investors will be looking to Fed Chair Jerome Powell to offer more insight into the Fed’s policy outlook when he testifies in front of the US Senate later today. We expect to see the US Dollar weaken if he drops any hints that the Fed may be exploring negative interest rates.
Canadian Dollar (CAD) Stable as Oil Hovers Around $25 a Barrel
The Canadian Dollar (CAD) was mostly rangebound through Tuesday’s trading session, with the oil-sensitive ‘Loonie’ left directionless as WTI crude held at $25 a barrel.
Australian Dollar (AUD) Buoyed by Improved Risk Sentiment
The Australian Dollar (AUD) trended higher overnight on Tuesday, with an uptick in market sentiment helping to bolster the appeal of the risk-sensitive currency.
New Zealand Dollar (NZD) Plunges on RBNZ Comments
The New Zealand Dollar (NZD) entered free-fall overnight in response to the Reserve Bank of New Zealand’s (RBNZ) latest policy decision.
While the RBNZ kept interest rates on hold this month, the bank reinforced expectations it could adopt negative rates in future, with Governor Adrian Orr stating the RBNZ will do ‘whatever it takes’.