EUR/USD Hits Key Levels, Pound to US Dollar and Euro Rallies
The Pound to Euro exchange rate hit an 11-week high, while EUR/USD and Pound to US Dollar both rose before retreating yesterday.
The Pound rallied against the Euro and Dollar after upbeat manufacturing PMIs confirmed factory activity soared to a two-year high.
Meanwhile, the US Dollar downside continued on the Fed’s Policy framework and coronavirus vaccine hopes, pushing Euro to Dollar exchange rates higher.
The Euro strengthened on the US Dollar’s weakness despite the Eurozone slipping back into deflation. However, the Eurozone gloomy data bolstered the Pound to Euro exchange rate.
Pound (GBP) Firms on Solid PMI Figures
The Pound (GBP) trended higher against the majority of its peers on Tuesday, bouncing back from a bank-holiday lull with the help of a solid PMI release.
While’s August’s final figures were revised slightly lower, they confirmed that factory activity rose to a new two-year high, bolstering hopes for a relatively speedy economic recovery in the UK.
Coming up, the spotlight for GBP investors today will be on a speech by the Bank of England’s (BoE) Ben Broadbent, who could reverse some of the Pound’s recent gains should he strike a cautious tone.
Euro (EUR) Buoyed Despite Shock Deflation Reading, EUR/USD Touches $1.20
The Euro (EUR) moved broadly higher through yesterday’s trading session, in spite of the Eurozone’s consumer price index revealing the bloc fell back into deflation last month.
Weakness in the US Dollar pushed the Euro higher, with EUR/USD exchange rates touching $1.20 before retreating lower again.
Not only does this stoke concerns that the Eurozone’s economic recovery has stalled amid Europe’s coronavirus resurgence, but is also likely to cause a headache for the European Central Bank (ECB) whose massive stimulus programme has so far failed to sustain a 2% inflation target.
In focus for EUR investors today will be this morning’s retail sales release from Germany. Will July’s unexpected slump in sales growth limit any upside in the Euro today?
US Dollar (USD) Sell-Off Gathers Momentum on Dovish Fed
The US Dollar (USD) plummeted on Tuesday, with investors continuing to shun the ‘Greenback’ in the wake of the announcement of the Federal Reserve’s policy shift at last week’s Jackson Hole summit.
Analysts see the Fed’s new inflation targets as keeping interest rates near zero for longer than previously thought, which alongside weak safe-haven demand amid coronavirus vaccine optimism, limited the appeal of the US Dollar.
This pushed EUR/USD and the Pound to US Dollar exchange rates higher before dropping lower again after gloomy Euro data and strong US manufacturing PMI reports.
Turning to today’s session both the ADP employment report and US factory orders are expected to print positively this afternoon, but will this be enough to pull the US Dollar out of its slump?
Canadian Dollar (CAD) Subdued Despite Robust Oil Prices
The Canadian Dollar (CAD) fell back during yesterday’s trading session, with the commodity linked ‘Loonie’ struggling in spite of robust oil prices and a stronger-than-expected domestic manufacturing PMI release.
Australian Dollar (AUD) Slides Following Record Fall in GDP
The Australian Dollar (AUD) was on the defensive overnight on Wednesday after Australia reported a record plunge in GDP in the second quarter.
The 7% contraction was larger than expected and plunges the country into its first recession in nearly 30 years.
New Zealand Dollar (NZD) Rallies on RBNZ Comments
The New Zealand Dollar (NZD) soared higher overnight on Wednesday after comments from Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr, in which he said the bank is not concerned by the NZD exchange rate.