Today’s Currency News: Euro to US Dollar Tumbles to Five-Month Low as USD Bolstered by Rising US Treasury Yields

Pound (GBP) Steady amidst Reopening Optimism

The Pound traded with modest gains through yesterday’s session, as the UK’s successful vaccination drive and the possibility of the reopening of England’s economy extended support to Sterling.

However, GBP investors still seem reluctant to make any aggressive bets on the Pound as they keep a close eye on local statistics amidst fears Europe’s coronavirus resurgence will cross the Channel.

Meanwhile, the publication of the UK’s latest GDP figures may offer GBP exchange rates support today after data published at the start of the European session revised growth up to 1.3% in the last quarter of 2020.

Euro (EUR) Stumbles on Coronavirus Fears

The Euro remained on the defensive on Tuesday as concerns over the rise in coronavirus cases across Europe and the EU’s sluggish vaccination programme continued to dampen EUR sentiment.

This offset the publication of Germany’s consumer price index (CPI) which reported German inflation surged in line with expectations in March.

Turning to today’s session, EUR investors will be focused on the Eurozone’s CPI release. While headline inflation is expected to have accelerated this month, will a stalling of core inflation limit any potential upside in the Euro?

US Dollar (USD) Bolstered by Rising Treasury Yields

The US Dollar rallied through yesterday’s trading session, rising in step with US Treasury yields.

The latest uptick in yields comes amidst increasingly bullish expectations for the US economic recovery this year, underpinned by emerging details over President Biden’s infrastructure stimulus plans, which will reportedly be worth $3 trillion and involve massive investment in green energy.

Looking ahead, the spotlight for USD investors today will be on the latest ADP employment report, where a strong reading could bolster expectations for Friday’s more influential payroll reading.

Canadian Dollar (CAD) Slips as Oil Prices Drop

The Canadian Dollar ticked lower on Tuesday as the oil-sensitive ‘Loonie’ was undermined by a near 2% drop in WTI crude prices.

Coming up this afternoon, the publication of Canada’s latest GDP figures could provide some lift for CAD exchange rates, amidst forecasts that growth will have accelerated from 0.1% to 0.5% in January.

Australian Dollar (AUD) Buoyed by Positive Chinese PMIs

The Australian Dollar mounted a modest recovery overnight on Tuesday, with the China-proxy ‘Aussie’ finding support after China’s latest PMI figures printed above expectations.

New Zealand Dollar (NZD) Dented by USD Strength

The New Zealand Dollar was left on the back foot in overnight trade, with investors shunning the risk-sensitive currency amidst broad USD strength.

Data Releases

10:00 EUR Inflation (Mar)

13:15 USD ADP Employment Change (Mar)

13:30 CAD GDP (Jan)

Matthew Andrews

Contact Matthew Andrews


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