Pound (GBP) Exchange Rates Give up Gains after Inflation Data
The Pound advanced on both the Euro and US Dollar yesterday despite a sharp increase in UK joblessness in April. However, Sterling shed gains this morning following the release of the UK’s inflation figures.
Annual CPI inflation fell from 1.5% to 0.8% in April, upping the odds of the Bank of England (BoE) taking interest rates below zero.
The Pound also came under pressure following the announcement that Rolls-Royce plan to cut 9,000 jobs as a result of the Coronavirus crisis.
Euro (EUR) Mixed before Consumer Confidence Data
A stronger-than-expected uptick in the German ZEW economic sentiment index was not enough to boost the Euro yesterday.
Investors were instead disappointed by an unexpected decline in May’s current conditions index, with the report highlighting the challenges still facing the Eurozone’s powerhouse economy.
Today’s Eurozone consumer confidence index is expected to show another decline in sentiment. If that proves to be the case the Euro could remain on the back foot.
US Dollar (USD) Under Pressure, FOMC Minutes Ahead
Demand for the US Dollar was already limited by an improvement in risk appetite, and sharp monthly declines in US building permits and housing starts only served to undermine USD further.
The US Dollar could extend losses If today’s minutes from the last Federal Open Market Committee (FOMC) policy meeting indicate that the Fed is prepared to take further action to support the US economy.
Canadian Dollar Boosted by Rising Oil Prices
Improvements in both risk appetite and oil prices lent the Canadian Dollar support on Tuesday.
However, CAD exchange rates could retreat this afternoon if Canada’s consumer price index shows the decline in inflation forecast by economists.
Australian Dollar Fluctuates Before PMI Data
Yesterday’s Reserve Bank of Australia (RBA) May meeting minutes offered little in the way of surprises. As policymakers signalled a willingness to leave monetary policy on hold in the near term, the Australian Dollar was able to continue benefiting from the impact of rising risk appetite.
However, AUD exchange rates came under pressure overnight as the Westpac leading index fell from -0.7% to -1.5%.
Investors will now be looking to Australia’s flash services and manufacturing data to establish how the Australian economy is holding up.
New Zealand Dollar Buoyed by Market Optimism
An improved sense of market confidence helped to keep the New Zealand Dollar on a solid footing on Tuesday. With the US Dollar under pressure and investors hopeful of further progress towards a reopening of the global economy risk appetite generally improved.