Pound (GBP) Upside Capped by Brexit Uncertainty
The Pound (GBP) found modest gains yesterday as an upbeat market mood offered some support to the currency and propelled it to a new multi-week high.
However, this upswing in Sterling was trimmed by lingering Brexit fears. A spokesperson for the Prime Minister quashed hopes for a deal as they reiterated that Britain is unwilling to compromise on key issues such as fisheries.
Brexit is likely to continue to act as the main catalyst of movement in GBP exchange rates through today’s trading session as the focus remains on the latest round of UK-EU trade talks.
Euro (EUR) Lifted by Hopes for V-Shaped Recovery
The Euro (EUR) drifted higher on Tuesday, partially supported by broad weakness in the US Dollar (USD) and rising optimism as more of Europe reopens.
EUR investors are growing increasingly optimistic of the chances for a V-shaped recovery in the Eurozone as coronavirus cases continue falling and economies start to kick back into gear.
Looking ahead, we could see further upside in the Euro limited this morning depending on how sharply unemployment in the Eurozone has risen in April.
US Dollar (USD) Undermined by Ongoing Civil Unrest
The US Dollar (USD) continued to retreat through yesterday’s trading session as widespread protests and riots rocked the US following the death of George Floyd in police custody.
With demonstrators ignoring curfews imposed throughout the US and the unrest growing, President Trump threatened to send in the military to ‘quickly solve the problem’, a move which USD investors fear could escalate tensions even further.
This may lead to additional pressure on USD exchange rates through Wednesday’s session if protests continue to grow.
Canadian Dollar (CAD) Strengthens as Oil Prices Near Three-Month High
The Canadian Dollar (CAD) trended higher on Tuesday, with the oil-sensitive ‘Loonie’ given a leg up as WTI crude prices struck their highest levels since 6 March on hopes the OPEC oil cartel will announce major production cuts later this week.
Turning to today’s session, the focus for CAD investors will be the Bank of Canada’s (BoC) latest interest rate decision. No policy changes are expected from the BoC this week, but traders will be looking for any potential tweaks to its forward guidance as Tiff Macklem takes over as governor.
Australian Dollar (AUD) Retreats from Best Levels as GDP Contracts
After soaring through Tuesday’s session on a wave of optimism, the Australian Dollar (AUD) retreated from a multi-month high overnight as Australia’s latest GDP figures revealed the domestic economy contracted 0.3% in the first quarter.
New Zealand Dollar (NZD) Flying High in Risk-On Trade
The New Zealand Dollar (NZD) also roared higher during yesterday’s session as an upbeat mood bolstered market risk appetite, with these gains extended overnight after China reported a surprise rebound in its services sector last month.