Pound (GBP) Subdued on Lingering Brexit Concerns
The Pound (GBP) retreated at the start of this week as lingering Brexit uncertainty dragged on Sterling sentiment.
This comes as the latest round of talks ended in deadlock once more, with the EU’s chief negotiator, Michel Barnier, warning on Friday that a trade deal ‘seems unlikely’ at this stage.
Meanwhile, concerns the UK is facing an impending unemployment crisis may continue to limit any upside in GBP exchange rates going forward, as analysts fear mass redundancies could begin next week as the UK’s furlough scheme starts to wind down.
Euro (EUR) Rallies, but Gains Capped by Coronavirus Concerns
The Euro (EUR) struck higher on Monday as the single currency’s negative correlation with the US Dollar (USD) saw it strengthen while USD exchange rates weakened.
However, these gains proved limited amidst ongoing concerns regarding Europe’s coronavirus resurgence as new cases spiked in some countries to levels not seen since May.
Turning to today’s session, the Euro is likely to struggle to find support in early trade after Germany’s GDP reading in the second quarter confirmed a record contraction.
However, EUR exchange rates may rally later in the session if Germany reports an improvement in business sentiment this month, with the publication of the IFO business climate index this morning.
US Dollar (USD) Undermined by Upbeat Trade after FDA Signs Off Plasma Transfer Treatment
The US Dollar (USD) opened this week on the defensive, with investors shunning the safe-haven ‘Greenback’ in response to upbeat market sentiment.
This improvement in the market mood was attributed to the announcement that the FDA had approved a coronavirus treatment involving the transfusion of plasma from recovered patients in the US.
Looking forward, any upside in the US Dollar is likely to remain limited today as USD investors refrain from placing bets ahead of the Federal Reserve’s Jackson Hole symposium later in the week.
Canadian Dollar (CAD) Muted as Oil Prices Stall
The Canadian Dollar (CAD) was mostly rangebound through yesterday’s trading session, with the appeal of the commodity-linked currency proving limited as crude oil prices stalled in early trade.
Australian Dollar (AUD) Boosted by Trade Deal Hopes
The Australian Dollar (AUD) edged higher in overnight trade on Monday, with the appeal of the risk-sensitive ‘Aussie’ strengthening amidst easing US-China trade tensions as both sides reaffirmed their commitment to a phase one deal.
New Zealand Dollar (NZD) Buoyed by Risk-On Trade
The New Zealand Dollar (NZD) also strengthened overnight, with optimism over a possible US-China trade deal and hopes for a coronavirus vaccine helping to bolster market sentiment.