Pound (GBP) Exchange Rates Recover Rate-Related Losses
Support for the Pound proved limited at the start of the week thanks to comments from Bank of England (BoE) Chief Economist Andy Haldane.
Haldane indicated that the central bank is examining the possibility of negative interest rates. Increasing anxiety over Brexit and the outlook of the UK economy added to the pressure on GBP exchange rates.
However, Sterling pushed higher against both the Euro and US Dollar this morning despite the UK’s latest employment figures confirming that the number of people claiming unemployment benefits in the UK soared in April.
According to the Office for National Statistics (ONS) the claimant count jumped by 856,500 last month.
Although today’s report revealed that the UK unemployment rate actually fell to 3.9% in the three months through March, the jump in benefit claims in April points to an increase in the unemployment rate next month.
Bundesbank Warning Weighs on Euro (EUR) Exchange Rates
The Bundesbank undermined demand for the Euro yesterday by highlighting the risk of a deeper second quarter contraction in Germany.
However, the Euro later derived some support from weakness in the US Dollar and the news that German Chancellor Merkel and French President Macron have agreed to support the Eurozone’s EUR500bn recovery fund plan.
Today’s ZEW economic sentiment surveys for Germany and the Eurozone could bolster the Euro if they show the improvement in confidence forecast by economists.
US Dollar (USD) Exchange Rates Stumble as Risk Appetite Improves
A general improvement in risk appetite left the US Dollar on the back foot at the start of the week.
Demand for USD remained limited after Federal Reserve Chairman Jerome Powell indicated that the Fed could take further action to support the US economy through the coronavirus crisis.
Economists have forecast that today’s US building permits and housing starts figures will show a sharp decline month-on-month.
Surge in Oil Prices Lifts Canadian Dollar (CAD) Exchange Rates
Brent crude prices broke above US$35 per barrel for the first time since early April yesterday. With markets increasingly optimistic that global demand will continue to pick up in the months ahead the Canadian Dollar was able to push higher.
Australian Dollar (AUD) Buoyed by Covid-19 Vaccine Hopes
Positive signs of progress towards a potential Covid-19 vaccine encouraged the Australian Dollar to push higher at the start of the week. Comments from Federal Reserve Chair Jerome Powell offered further encouragement to AUD exchange rates as he touted the possibility of further monetary loosening.
The Australian Dollar remained elevated following the release of minutes from the Reserve Bank of Australia’s (RBA) latest policy meeting.
New Zealand Dollar Benefits from Rising Risk Appetite
A weaker US Dollar and rising risk appetite helped to shore up the New Zealand Dollar yesterday. With investors still hopeful that the Covid-19 crisis has passed its peak, the risk-sensitive NZD remains on a stronger footing.