Pound Steady on UK Vaccination Optimism
The Pound (GBP) traded robustly through yesterday’s trading session as GBP investors continued to be impressed by the pace of the UK’s vaccination rollout.
At the current pace, the UK government may reach its target to vaccinate the most vulnerable groups against the coronavirus by mid-February, potentially allowing England’s lockdown to start to be eased before March.
Meanwhile, the publication of the UK’s consumer price index looks to offer support to the Pound today, after inflation beat expectations in December.
The 0.6% rise in December, up from 0.3% in November, is helping push the Pound US Dollar exchange rate near $1.37 this morning and GBP/EUR near €1.13.
EUR/USD Rallies in Upbeat Trade
The Euro strengthened on Tuesday as the negative correlation in the EUR/USD pairing allowed the single currency to capitalise on the weakness of the US Dollar (USD).
This uptick in the Euro was reinforced by the latest ZEW surveys following a better-than-expected rise in German economic sentiment this month.
In focus for EUR investors today will be the outcome of the European Central Bank’s (ECB) first policy meeting of 2021. Will we see policymakers voice more concerns about the recent appreciation of the Euro?
Before the ECB meeting, the Euro is coming under pressure so far this morning following confirmation the Eurozone’s inflation rate remained negative at -0.3% on the year.
This negative reading has sent the Euro Pound exchange rate tumbling, while EUR/USD is attempting to hold yesterday’s gains.
US Dollar Slides on Stimulus Speculation
The US Dollar tumbled yesterday as hopes for even more US stimulus measures bolstered market sentiment and undermined demand for the safe-haven ‘Greenback’.
This came as incoming Treasury Secretary Janet Yellen called for the US to ‘act big’ during her confirmation hearing, stoking speculation that the new administration could seek to pass a massive new stimulus package.
In the spotlight today will be the inauguration of Joe Biden as the 46th US President.
Biden is expected to spend his first hours in office signing a raft of executive orders, with USD investors paying close attention to Biden’s policy priorities as they look to estimate how his first term could impact the US economy.
USD exchange rates continue to weaken this morning ahead of Biden’s inauguration. The US Dollar against the Pound is down nearly 0.4% this morning.
However, the US Dollar Euro exchange rate appears to have stemmed its losses at the time of writing following the Eurozone’s inflation data release.
Canadian Dollar Firms on Oil Rally
The Canadian Dollar (CAD) struck higher on Tuesday, as the appeal of the oil-sensitive ‘Loonie’ was bolstered by a solid bump in crude prices.
Coming up, the conclusion of the Bank of Canada’s (BoC) latest policy meeting will be in focus for CAD investors later this afternoon, with a positive outlook for the bank potentially lifting the Canadian Dollar.
Australian Dollar Buoyed in Risk-On Trade
The Australian Dollar (AUD) ticked higher overnight on Tuesday, with the risk-sensitive ‘Aussie’ attracting investors amidst the improving market mood.
Meanwhile, the upward momentum in AUD exchange rates could be extended later tonight as Australia’s latest figures are expected to report a fall in unemployment last month.
New Zealand Dollar Firms amid Upbeat Market Mood
The New Zealand Dollar (NZD) also strengthened in overnight trade, with optimism over Joe Biden’s presidency helping to bolster market risk appetite.