Pound (GBP) Firms on Bailey Comments
The Pound (GBP) enjoyed modest gains through yesterday’s trading session in response to comments from Bank of England (BoE) Governor Andrew Bailey.
Bailey seemed upbeat about the UK’s recovery as he noted economic optimism has risen now that people can ‘see light at the end of the tunnel’ but warned there is still uncertainty due to potential structural changes.
In the absence of any notable UK data releases today, the focus for GBP investors looks to be on the latest UK coronavirus statistics. Will a slowing rate of decline be a reason for concern?
Euro (EUR) Weakens on Surprise Slump in German Industrial Production
The Euro (EUR) slipped on Monday, with the single currency retreating in response to Germany’s latest industrial production release after it revealed a surprise contraction of factory output in January.
This left the Euro particularly exposed to pressure from the US Dollar (USD), with the negative correlation in the pairing further weakening EUR exchange rates.
Turning to today’s session, the only data release of note will be the Eurozone’s latest GDP estimate. This is expected to confirm growth in the bloc contracted in the last quarter of 2020, setting up the Eurozone for a double-dip recession this year and likely dragging on the Euro.
US Dollar (USD) Buoyed by Rising Yields
The US Dollar (USD) maintained a positive trajectory at the start of this week’s session as the currency continued to rise in step with US Treasury yields.
The latest strengthening of yields came in response to the news the US Senate had passed President Biden’s $1.9 trillion stimulus package, which further bolstered expectations for a swift US economic rebound.
The stimulus bill will now move back to the Democrat controlled House of Representatives today. This could trigger another uptick in the US Dollar as it is expected to pass easily, paving the way for Biden to sign it into law later this week.
Canadian Dollar (CAD) Dips amid Retreating Oil Prices
The Canadian Dollar (CAD) edged lower on Monday, with the appeal of the oil-sensitive ‘Loonie’ being undermined as WTI crude pulled back from a two-year high to fall back to $65 a barrel.
Australian Dollar (AUD) Firms on Upbeat Business Confidence
The Australian Dollar (AUD) ticked higher overnight on Monday, with the ‘Aussie’ attracting bids after the latest NAB business confidence index printed at a 10-year high in February.
New Zealand Dollar (NZD) Slips on Disappointing Data
The New Zealand Dollar (NZD) was left on the defensive in overnight trade, with investors shunning the ‘Kiwi’ after data showed weaker-than-expected growth in domestic manufacturing sales in the last quarter of 2020.
Data Releases
10:00 EUR GDP (Q4)
22:00 AUD RBA Lowe Speech
23:30 AUD Consumer Confidence (Mar)