Pound (GBP) Dented by Brexit Fears
The Pound (GBP) was on the defensive yesterday in response to reports from the Daily Telegraph that the UK is ready to abandon Brexit trade negotiations with the EU.
This comes as talks between the two sides remain deadlocked, with UK sources suggesting that ministers are already working on the assumption that a deal will not be reached before the end of the transition period.
Looking ahead, we expect lingering Brexit concerns to weigh on Sterling sentiment today, limiting any potential upside from the Confederation of British Industry’s (CBI) latest industrial order figures.
Euro (EUR) Jumps on Coronavirus Fund Optimism
The Euro (EUR) roared higher on Wednesday, climbing to a new 18-month high amidst hopes the EU’s new coronavirus relief fund will enable a swift recovery in the Eurozone.
The upside in the single currency was also supported by comments from European Central Bank (ECB) President Christine Lagarde, who gave her approval for the new fiscal stimulus package.
Potentially extending the Euro’s gains through today’s session will be the Eurozone’s latest consumer confidence figures, which are expected to show household sentiment continued to improve this month.
US Dollar (USD) Undermined by Positive Market Sentiment
The US Dollar (USD) fell to its lowest levels since March during yesterday’s trading session, with investors continuing to shun the safe-haven ‘Greenback’ amid hopes for a potential coronavirus vaccine.
Also limiting the appeal of USD was anxiety over the recent spike of Covid-19 cases in the US as well as concerns the next round of fiscal stimulus could be delayed by political wrangling between the Republicans and Democrats.
Coming up, USD investors will pay close attention to US initial jobless claims, with the US Dollar potentially facing some headwinds if claims remained elevated last week.
Canadian Dollar (CAD) Steady as Inflation Rebounds
The Canadian Dollar (CAD) held steady on Wednesday as a stronger-than-expected rebound in Canadian inflation last month helped to offset a drop in oil prices.
Australian Dollar (AUD) Sidelined by US-China Tensions
After soaring through the first half of the week, the Australian Dollar (AUD) found itself stuck in a narrow range overnight on Wednesday as renewed US-China tensions reset market risk appetite.
New Zealand Dollar (NZD) Fluctuates in Choppy Trade
The New Zealand Dollar (NZD) fared a little better than its antipodean cousin in overnight trade, but still failed to recapture its earlier highs amidst a deterioration in market risk appetite.