Pound Flat as Coronavirus Remains in Focus
The Pound (GBP) struggled to find momentum yesterday as domestic coronavirus developments left the currency without any clear directional bias.
While the UK’s vaccination programme continues to show impressive results, the government appears to be no closer to easing the national lockdown, much to the chagrin of GBP investors.
Looking ahead, the Pound is likely to remain muted through today’s session as well, as January’s finalised PMI figures are expected to confirm the UK’s private sector suffered a sizable contraction during the latest lockdown.
Euro Dives on Double-Dip Recession Fears
The Euro (EUR) tumbled on Tuesday as a smaller-than-expected contraction in the Eurozone economy in the last quarter of 2020 was not enough to quell fears the bloc is hurtling towards a double-dip recession.
Also hurting the single currency were growing concerns about the EU’s failures so far with its vaccination rollout and how this could lead to prolonged lockdown measures.
Coming up today, the publication of the Eurozone’s consumer price index may pave the way for the Euro to mount a recovery, as economists forecast that inflation in the bloc will have finally begun to accelerate again in January after five consecutive months of deflation.
US Dollar Extends Rally in Cautious Trade
The US Dollar (USD) continued to press its advantage yesterday, with ongoing uncertainty over the size and timing of the next US stimulus package bolstering the appeal of the safe-haven ‘Greenback’.
However, these gains were tempered somewhat by the sense of calm which appeared to have returned to Wall Street, with stocks which had been pumped by a frenzy of small retail traders beginning to retreat and fears of hedge fund squeezes easing.
Turning to today’s session, USD investors will be focused on the latest ISM non-manufacturing PMI, where a slowing of US service sector activity could add to the gloomy mood and push the US Dollar even higher.
Canadian Dollar Firms amid Oil Rally
The Canadian Dollar (CAD) struck higher on Tuesday as the appeal of the oil-linked ‘Loonie’ was bolstered by WTI crude prices rocketing over 2% to $54 a barrel.
Australian Dollar Undermined by Dovish Comments from RBA’s Lowe
The Australian Dollar (AUD) made an attempt to rally overnight on Tuesday but found its gains tempered by dovish comments from Reserve Bank of Australian (RBA) Governor Philip Lowe.
New Zealand Dollar Rallies on Surprise Fall in Unemployment
The New Zealand Dollar (NZD) rallied in overnight trade as NZD investors welcomed a stronger-than-expected labour report, which revealed unemployment unexpectedly dropped from 5.3% to 4.9% in the last quarter of 2020.