Pound (GBP) Buoyed by Vaccine Hopes
The Pound (GBP) trended higher through yesterday’s trading session, with the UK’s vaccine success allowing the currency to take advantage of the upbeat market mood.
However, these gains were kept in check by concerns that Boris Johnson’s roadmap for easing lockdown could be subject to change after the PM warned at the start of the week that the reopening of schools is a clear risk.
In the continued absence of any notable GBP economic releases, the focus for GBP investors today will remain on UK coronavirus statistics. Will the continued success of the vaccination programme be able to offset any concerns that the fall in new cases may be slowing?
Euro (EUR) Muted on Disappointing GDP Release
The Euro (EUR) was subdued on Tuesday, with the appeal of the currency being undermined after the Eurozone’s latest GDP estimate reported growth in the last quarter of 2020 was revised down from –0.6% to –0.7%.
However, the single currency’s negative correlation with the US Dollar (USD) helped to cap the Euro’s losses following a broad pullback in the US currency.
Meanwhile, any further upside in the Euro may be limited today as EUR investors brace ahead of the conclusion of the European Central Bank’s (ECB) latest policy meeting on Thursday.
US Dollar (USD) Retreats as US Treasury Yields Slump
The US Dollar was on the defensive yesterday, stumbling in response to a sharp pullback in US Treasury yields, which fell from a one-year high.
Further limiting the appeal of the safe-haven ‘Greenback’ was a prevailing risk-on mood, driven by US stimulus hopes and China’s stock intervention.
In the spotlight today will be the publication of the latest US consumer price index. Economists are forecasting February’s CPI figures will report a sharp acceleration of inflation, which if correct, could trigger a rebound in US yields and propel the US Dollar higher.
Canadian Dollar (CAD) Dented by Stalling Oil Prices
The Canadian Dollar (CAD) struggled to find support on Tuesday, with the commodity-linked ‘Loonie’ undermined as oil prices stalled well below their recent highs.
Coming up, the Bank of Canada (BoC) will hold its latest policy meeting later today. Will a positive outlook from the bank help to boost CAD exchange rates?
Australian Dollar (AUD) Slips in Spite of Upbeat Consumer Confidence
The Australian Dollar (AUD) fell back overnight on Tuesday, with renewed USD strength dampening the appeal of the ‘Aussie’ in spite of a stronger-than-expected consumer confidence reading in March.
New Zealand Dollar (NZD) Retreats as Risk Appetite Softens
The New Zealand Dollar (NZD) also trended lower in overnight trade as renewed demand for the US Dollar dented market risk appetite.