Pound (GBP) Rallies on Brexit Hopes
The Pound (GBP) trended higher yesterday, riding a wave of Brexit optimism after Boris Johnson suggested that with a ‘bit of oomph’ it is feasible a deal could be reached in July.
This improved Sterling sentiment despite a worrying jobs report from the UK revealing the economy shed over 600,000 jobs in the three months to May and wage growth slowed to just 1% over the same period.
Looking ahead, this morning’s CPI figures are likely to leave GBP exchange rates weaker as another fall in inflation may increase the chances of the Bank of England (BoE) exploring negative interest rates.
Euro (EUR) Slips Despite Upbeat Economic Sentiment
The Euro (EUR) fell back on Tuesday, with the single currency’s negative correlation with the US Dollar (USD) leaving it weaker as the US currency rallied.
This slump in EUR exchange rates came in spite of the latest ZEW surveys reporting a jump in economic sentiment in Germany as well as the wider Eurozone.
Meanwhile, the Euro is likely to remain on the back foot through today’s session as the Eurozone’s own CPI figures are set to confirm the bloc suffered some deflation last month.
US Dollar (USD) Jumps on Stellar Retail Sales Report
The US Dollar (USD) strengthened through yesterday’s session, carried higher on the back of strong US retail sales, which reported a record 17.7% surge in sales growth last month.
However these gains were tempered somewhat by Jerome Powell’s testimony in front of Congress, with the Federal Reserve Chair warning the timing and strength of the US economic recovery remains unclear.
While Powell’s testimony will continue today, it’s unlikely to cover any new ground and as a result any movement in the US Dollar may be dictated by market sentiment.
Canadian Dollar (CAD) Underpinned by Rebound in Oil Prices
The Canadian Dollar (CAD) trended higher on Tuesday, with the commodity-linked currency receiving a boost following a 4% jump in US oil prices.
Whether the ‘Loonie’ can maintain this upward trajectory will be determined by today’s CPI figures and whether Canada was able to avoid deflation in May.
Australian Dollar (AUD) Buoyed by Improving Risk Appetite
The Australian Dollar (AUD) struck higher overnight on Tuesday, with demand for the ‘Aussie’ bolstered by improving market sentiment and hopes for a UK-Australia trade deal.
New Zealand Dollar (NZD) Strengthens in Risk-On Trade
The New Zealand Dollar (NZD) also rallied late into Tuesday’s Asian session, with the risk sensitive currency bolstered by the fresh risk-on sentiment.
Coming up, New Zealand will finally publish its first quarter GDP figures later tonight, with NZD investors eager for more insight into how the coronavirus lockdown impacted the domestic economy.