Pound (GBP) Flat Ahead of UK Budget
The Pound traded in a narrow range through yesterday’s session, as investors were reluctant to make any aggressive bets on the currency ahead of Chancellor Rishi Sunak’s budget announcement later today.
Sunak is expected to extend the current furlough scheme and provide support to help businesses when the current lockdown is lifted, but some analysts are wary about rumoured plans to also raise taxes.
In addition to the budget, GBP investors will also be focused on the latest economic forecasts from the Office for Budget Responsibility (OBR), where an upbeat outlook for 2021 could support any upside movement in the Pound.
Euro (EUR) Muted on Lacklustre Data
The Euro was subdued on Tuesday in response to some uninspiring data releases from the Eurozone.
First up was a much larger-than-expected slump in German retail sales in January, with sales growth tumbling -4.5%, more than forecasts for a much more modest 0.3% contraction. This was then followed by the Eurozone’s latest CPI release, which reported inflation stalled at 0.9% last month.
Turning to today’s session, the publication of the Eurozone’s latest services PMI could put some more pressure on the Euro as it is expected to confirm growth in the bloc’s service sector fell in February.
US Dollar (USD) Dented as Treasury Yields Slip
The US Dollar ticked lower yesterday, with the currency being undermined by a drop in US Treasury yields.
Also weighing on the US dollar was an uptick in equity markets as investors shrugged off warnings from China about a bubble in financial markets.
Coming up, the focus for USD investors today will be on the latest ISM non-manufacturing PMI. Will another solid expansion in the US service sector help to bolster the US Dollar later this afternoon?
Canadian Dollar (CAD) Flat as GDP Figures Fail to Excite Investors
The Canadian Dollar was mostly rangebound through Tuesday’s trading session, as Canada’s stronger-than-expected quarterly GDP release was undermined after accompanying figures showed growth almost ground to a halt in December.
Australian Dollar (AUD) Firms as GDP Beats Expectations
The Australian Dollar drifted higher overnight on Tuesday, with the ‘Aussie’ attracting bids after Australian GDP printed higher-than-expected in the last quarter of 2020.
New Zealand Dollar (NZD) Muted as China PMI Misses
The New Zealand Dollar was left subdued in overnight trade, with the ‘Kiwi’ struggling to find support after China’s latest services PMI printed slightly below expectations, damping market risk appetite.