Pound (GBP) Firms on Brexit Optimism
The Pound (GBP) struck higher during yesterday’s session amid media rumours the UK and EU may be close to reaching a Brexit trade deal.
However, tempering these gains were the publication of the UK’s latest jobless figures, which reported the unemployment rate rose to a new three-year high in October.
Outside of Brexit, GBP exchange rates are also likely to be influenced by the publication of the UK’s consumer price index this morning, where a slight slowing of inflation looks to have put some pressure on the Pound.
Euro (EUR) Muted on Lockdown Concerns
The Euro (EUR) struggled for direction yesterday as EUR investors continued to express concern over how the introduction of new lockdown measures in Germany could impact the Eurozone economy.
However the single currency was prevented from suffering any notable losses amidst some cautious Brexit optimism and the weakening of the US Dollar (USD).
Looking ahead, the focus for EUR investors today will undoubtedly be on the Eurozone’s latest PMI figures. This could see the Euro face some headwinds this morning as December’s preliminary releases are expected to report the contraction in the bloc’s private sector continued this month.
US Dollar (USD) Dented by Vaccine Optimism
The US Dollar experienced modest losses through yesterday’s trading session as demand for the safe-haven currency was dented following the news that the FDA had deemed Moderna’s vaccine as highly effective, putting it one step closer to receiving approval for emergency use in the US.
Also dampening the appeal of the ‘Greenback’ was the publication of the latest US industrial production figures, which reported factory output slowed in November.
In the spotlight today we have the Federal Reserve’s final policy decision of 2020.
While no policy changes are expected from the Fed this month, USD investors will be keeping a close eye on the bank’s forward guidance for any hints as to how the Fed may shape monetary policy in 2021.
Canadian Dollar (CAD) Buoyed by Rising Oil Prices
The Canadian Dollar (CAD) ticked higher on Tuesday, with the oil-sensitive ‘Loonie’ strengthening as WTI crude climbed back above $47 a barrel.
Coming up, the publication of Canada’s latest CPI figures may offer additional support for the Canadian Dollar later this afternoon if domestic inflation rose in with expectations last month.
Australian Dollar (AUD) Jumps in Risk-On Trade
The Australian Dollar (AUD) surged overnight on Tuesday, as broad weakness in the US Dollar and the upbeat market mood helped to underpin the risk-sensitive ‘Aussie’.
New Zealand Dollar (NZD) Strengthens amid Improving Risk Appetite
The New Zealand Dollar (NZD) also rallied in overnight trade as the risk-on tone saw investors favour high-yield currencies likely the ‘Kiwi’.
Coming up, the publication of New Zealand’s latest GDP figures later this evening will be closely watched by NZD investors, with a strong rebound in the third quarter likely to extend the upside in the ‘Kiwi’.