The US Dollar slipped yesterday as the Fed’ gloomy outlook undermined USD exchange rates. However, the US Dollar is strengthening so far this morning, although this could be short-lived ahead of the US GDP data for the second quarter, with forecasts at a record contraction of -34.1%.
Meanwhile, GBP/USD hits $1.30 and the Pound to Euro exchange rate is rising after a worse-than-expected 10.1% drop in Germany’s Q2 GDP this morning. This has also pushed the EUR to USD rate slightly lower.
Pound (GBP) Extends Rally against the Euro and USD
The Pound (GBP) maintained its bullish trajectory yesterday, largely thanks to some cautious mark optimism.
Also, likely aiding Sterling’s advance were the Bank of England’s (BoE) latest housing figures amidst a sharp increase in Mortgage approvals in June.
Turning to the second half of the week, we may see the Pound begin to relinquish some of its gains, however, as the conclusion of the latest round of talks brings Brexit back into focus, likely highlighting the lack of progress made through July.
Euro (EUR) Struggles after Worse-Than-Expected German GDP
The Euro (EUR) was left mostly directionless on Wednesday, with a lull in notable economic releases leaving the single currency exposed to the whims of investors.
This morning, EUR investors have a slew of German data and Eurozone unemployment figures to sink their teeth. Germany’s preliminary GDP release for the second quarter came in worse-than-expected at -10.1%, the worst reading since 1970.
This could exert some pressure on the Euro today, depending on how deep a recession the Eurozone’s largest economy finds itself.
US Dollar (USD) Slips on Dovish Fed
The US Dollar (USD) was met by another sell-off during yesterday’s session in response to the Federal Reserve’s latest rate decision.
As expected, the bank kept rates on hold this month, but highlighted in its policy statement its concerns over the coronavirus resurgence in the US and its threat to economic activity in the second half of 2020.
Coming up today all eyes will be on the latest US GDP estimate. Expect to see the US Dollar come under pressure as economists forecast today’s figures will show an astounding 34.1% contraction of growth in the second quarter
Canadian Dollar (CAD) Dips as Oil Prices Hold at $41
The Canadian Dollar (CAD) ticked lower on Wednesday, with the commodity-linked currency stumbling as a surprise surplus in US crude stockpiles weighed on oil prices.
Australian Dollar (AUD) Dented by Coronavirus Worries
The Australian Dollar (AUD) trended lower overnight on Wednesday as AUD investors expressed concern over a sharp rise in coronavirus cases in the state of Victoria despite a lockdown being introduced in Melbourne earlier in the month.
New Zealand Dollar (NZD) Undermined by Gloomy Business Confidence
The New Zealand Dollar (NZD) also trended lower overnight, with the ‘Kiwi’ falling in response to another gloomy business confidence reading in July.