Pound (GBP) Slips as Data Highlights Massive Slump in Trade with the EU
The Pound (GBP) was on the defensive at the end of last week’s session after the UK’s latest trade balance revealed the extent to which trade between the UK and the EU has dropped in 2021.
Data published by the Office for National Statistics (ONS) reported UK exports to the EU plunged a record 40% in January, offsetting some stronger-than-expected GDP figures which showed the UK economy shrank 2.9% over the same period.
Looking ahead, the main catalyst of movement in the Pound this week looks to be the Bank of England’s (BoE) latest policy meeting, where an upbeat economic outlook from the bank could help to bolster the appeal of Sterling.
Euro (EUR) Buoyed by Stronger-than-Expected Data
The Euro (EUR) ticked higher on Friday as EUR investors welcomed the Eurozone’s latest industrial production figures that revealed a stronger-than-expected rebound in factory output at the start of 2021.
However, the single currency’s negative correlation with the US Dollar meant these gains were ultimately capped as USD exchange rates raced higher.
In the spotlight for EUR investors in the first half of this week will be the latest ZEW surveys from Germany. Economic sentiment in the Eurozone’s largest economy is expected to have improved again this month, which is likely to reflect well on the Euro.
US Dollar (USD) Surges in Tandem with Treasury Yields
The US Dollar (USD) closed last week’s session on a high, soaring in tandem with US Treasury yields, which surged after President Biden promised that every American would have access to a coronavirus vaccine by May, turbocharging hopes for a swift reopening of the economy and rising inflation expectations.
The ‘Greenback’s rally was then reinforced by the latest US consumer sentiment index as this month’s reading revealed household sentiment rebounded to its best levels since the start of the pandemic.
Turning to this week’s session, the focus for USD investors will be on the Federal Reserve’s latest policy meeting. Will Fed Chair Jerome Powell maintain his dovish bias and weaken the appeal of the US Dollar?
Canadian Dollar (CAD) Soars Following Massive Drop in Unemployment
The Canadian Dollar (CAD) skyrocketed on Friday, as CAD investors seized on the publication of Canada’s latest jobs figures, which reported that domestic unemployment plummeted from 9.4% to 8.2% in February.
Australian Dollar (AUD) Dips in the Face of USD Strength
After retreating at the end of last week’s session, the Australian Dollar (AUD) continued to trend lower at the start of this week as the strength of the US Dollar dampened appetite for the high-risk ‘Aussie’.
New Zealand Dollar (NZD) Buoyed by Upbeat Chinese data
The New Zealand Dollar (NZD) caught some bids at the start of this week, rising overnight on Sunday as the appeal of the risk-sensitive ‘Kiwi’ was bolstered by some upbeat Chinese data.
Data Releases
12:30 USD Empire State Manufacturing (Mar)
00:30 AUD RBA Minutes