Pound (GBP) Extends Rally on Hawkish BoE
The Pound (GBP) remained well supported through the first half of yesterday’s session, with Sterling continuing to enjoy positive flows stemming from Bank of England (BoE) Governor Andrew Bailey’s downplaying of negative rate speculation earlier in the week.
However the Pound was unable to sustain these gains amidst concerns over the UK’s latest coronavirus statistics, which reported the highest number of daily deaths during the pandemic.
In the continued absence of any notable UK data releases, the focus for GBP investors today is likely to remain on domestic coronavirus developments as markets remain wary of greater restrictions being placed on parts of the UK.
Euro (EUR) Dented by ECB FX Comments
The Euro (EUR) struck lower against the majority of its peers yesterday as it was undermined by comments from European Central Bank (ECB) President Christine Lagarde, who indicated the ECB is aware of the negative effects of the EUR exchange rate.
Also weighing heavily on the single currency were fears over the collapse of Italy’s government as budget disagreements threatened to split apart the country’s coalition government.
In the spotlight today we have Germany’s budget for the coming year. EUR investors will be looking to Europe’s largest economy to commit to a major increase in fiscal spending to support Germany’s economic recovery from the coronavirus, potentially leading to some weakness in the Euro if the budget fails to impress.
US Dollar (USD) Firms ahead of Powell Speech
The US Dollar (USD) ticked higher on Wednesday, bolstered by a faster-than-expected rise in inflation and general risk-off tone.
Further boosting the appeal of the US Dollar was a rise in US political uncertainty, as Democrats moved forwards with efforts to impeach President Donald Trump for inciting last week’s riots at the capitol.
Turning to today’s session, the focus for USD investors will be on a speech from Federal Reserve Chair Jerome Powell, whose take on whether the Fed should begin tapering its quantitative easing programme could bolster the US dollar further if he is in support of reducing stimulus.
Canadian Dollar (CAD) Muted in Spite of Robust Oil Prices
The Canadian Dollar (CAD) struggled to find momentum on Wednesday, with the commodity-linked ‘Loonie’ unable to attract investors in spite of WTI oil prices striking their best levels in almost a year.
Australian Dollar (AUD) Bolstered by Strong Chinese Trade Figures
The Australian Dollar (AUD) rallied overnight on Wednesday, with the China proxy ‘Aussie’ enjoying a boost on the back of stronger-than-expected Chinese trade figures.
New Zealand Dollar (NZD) Struggles for Direction
The New Zealand Dollar (NZD) was mostly rangebound in overnight trade, as lingering coronavirus concerns prevented the ‘Kiwi’ from making any significant gains in spite of a pullback in the US Dollar (USD).