Pound (GBP) Buoyed by Brexit Deal Optimism
The Pound (GBP) struck higher through yesterday’s trading session, underpinned by reports that the UK and EU could sign off a post-Brexit trade deal ‘early next week’.
While GBP investors welcomed the news, Sterling’s gains proved quite modest as many traders remain cautious for fears that differences over fishing rights and the level playing field could still cause talks to collapse.
Turning to today’s session, the publication of the UK’s consumer price index, could see the Pound extend its gains further following a stronger-than-expected pickup in inflation last month.
Euro (EUR) Steady as Vaccine Boost Fades
The Euro (EUR) found some modest gains on Tuesday, the single currency benefitting from its negative correlation against the US Dollar (USD) as the ‘Greenback’ fell back.
Capping this upside in EUR sentiment were ongoing concerns over Europe’s coronavirus woes as Monday’s vaccine optimism already began to fade.
Looking ahead, the Euro is likely to face some headwinds this morning as the Eurozone’s latest CPI release is expected to confirm the bloc remained in a state of deflation last month.
US Dollar (USD) Sours amid Soaring US Coronavirus Cases
The US Dollar (USD) struggled to find support yesterday as rocketing US coronavirus cases prompted many states to impose new restrictions or pause easing plans.
Exerting additional pressure on the ‘Greenback’ was the publication of the latest US retail sales figures, where a 0.3% expansion missed expectations and stoked concerns over weak consumer demand in the run-up to the vital holiday sales period.
In the absence of any notable USD data releases today, the US Dollar is likely to remain driven by domestic coronavirus developments as well as the ongoing uncertainty surrounding Biden’s transition to president.
Canadian Dollar (CAD) Undermined by Sliding Oil Prices
The Canadian Dollar (CAD) edged lower on Tuesday, with the appeal of the commodity-linked ‘Loonie’ dampening due to a drop in oil prices.
Coming up later this afternoon, the publication of Canada’s own CPI figures could exert more pressure on CAD exchange rates if the country remained in a state of deflation last month.
Australian Dollar (AUD) Slips on Disappointing Wage Data
The Australian Dollar (AUD) tumbled overnight on Tuesday, retreating in response to Australia’s latest wage price index as average earnings rose slower than expected in the third quarter.
New Zealand Dollar (NZD) Dips as Vaccine Optimism Fades
The New Zealand Dollar (NZD) also fell back in overnight trade, with demand for the risk-sensitive ‘Kiwi’ dampening as concerns over surging global coronavirus cases offset optimism over a new vaccine.