Pound US Dollar Slumps to Six-Week Low as Skittish Trade Bolsters USD Demand

Pound (GBP) Dented by Vaccine Concerns

The Pound struggled to attract support during yesterday’s trading session, with the currency continuing to suffer as a result of the ongoing spat between the UK and EU over vaccine exports.

This slump in Sterling sentiment came despite the publication of the UK’s latest jobs figures reporting a drop in unemployment and acceleration of wage growth in January.

Turning to today’s session, the publication of the UK’s consumer price index may leave GBP exchange rates on the back foot today after data published at the start of the European session revealed a surprise slump in domestic inflation last month.

This will be followed by the UK’s latest PMI figures, which could offer support to the Pound if the private sector expanded in line with expectations this month.

Euro (EUR) Retreats as Germany Extends Lockdown

The Euro retreated on Tuesday following the news that Germany would extend its current lockdown measures through Easter as the country struggles to contain a resurgence of coronavirus cases.

With more Eurozone countries likely to follow Germany in tightening restrictions as the more viral UK strain tears through the continent, EUR investors are naturally growing increasingly concerned the bloc’s economic recovery could be delayed.

Looking ahead, the publication of the Eurozone’s latest PMI figures will be the primary focus for EUR investors this morning, and could drive the Euro lower again if economic activity continued to contract this month.

US Dollar (USD) Surges in Risk-Off Trade

The US Dollar soared through yesterday’s trading session, with investors flocking to the safe-haven currency amidst rising concerns over the coronavirus situation in Europe as well as fears over new tensions between the West and China.

These gains were further bolstered by reports that President Joe Biden is considering additional stimulus measures with a $3 trillion infrastructure package thought to be in the works.

Coming up, the US Dollar could face some headwinds through today’s trading session as data published later this afternoon is expected to report US durable goods orders slowed sharply last month.

Canadian Dollar (CAD) Remains Robust in Spite of Oil Slump

The Canadian Dollar ticked higher against all but the US Dollar on Tuesday, with CAD investors seemingly shrugging off the sharp drop in oil prices, which would have normally undermined the appeal of the commodity-sensitive ‘Loonie’.

Australian Dollar (AUD) Slumps in Gloomy Trade

The Australian Dollar struck lower overnight on Tuesday, with the risk-sensitive ‘Aussie’ struggling to attract investors amidst the prevailing risk-off mood, which overshadowed some upbeat domestic PMI figures.

New Zealand Dollar (NZD) Dented by Souring Risk Appetite

The New Zealand Dollar also fell back in overnight trade, with the ‘Kiwi’ falling afoul of the recent plunge in market sentiment, while government intervention to cool the housing market also continues to weigh on NZD exchange rates.

Data Releases

07:00 GBP Inflation Rate (Feb)

09:00 EUR Manufacturing PMI (Mar)

09:00 EUR Services PMI (Mar)

09:30 GBP Manufacturing PMI (Mar)

09:30 GBP Services PMI (Mar)

12:30 USD Durable Goods Orders (Feb)

14:00 USD Fed Powell Testimony

15:00 EUR Consumer Confidence (Mar)

Matthew Andrews

Contact Matthew Andrews