Pound US Dollar Boosted by UK Reopening as USD Slips amid Risk-On Trade

Pound (GBP) Supported by Robust Manufacturing PMI

The Pound (GBP) traded robustly at the end of last week’s session after the UK’s latest manufacturing PMI was revised higher.

Data published by ISM Markit saw the manufacturing PMI revised up to 58.9 in March, denoting the factory sector’s fastest expansion in a decade.

Meanwhile, the focus for GBP investors this week will be on the government’s decision to press forward with plans to reopen non-essential retail in England from 12 April, with the confirmation likely to support the Pound.

Euro (EUR) Steady on Positive Data

The Euro (EUR) found limited support in the second half of last week’s session as data revealed a rebound in German retail sales in February and a record expansion in the Eurozone’s manufacturing sector last month.

However these gains remained limited in light of ongoing concerns over Europe’s coronavirus resurgence and the imposition of new lockdown restrictions in countries like France.

Turning to this week’s session, it’s likely these coronavirus concerns will remain a key catalyst in the Euro, potentially leading to further weakness in the single currency if cases continue to rise.

US Dollar (USD) Slips as Strong US Data Fuels Risk-On Trade

The US Dollar (USD) was muted last Thursday as a disappointing rise in new jobless claims offset a massive surge in the latest US manufacturing PMI.

A bumper payroll reading of 916,000, far higher than the 647,000 forecast, then provided support for the US Dollar amid thin Easter trade, allowing USD exchange rates to hold firm going into the weekend.

However, the ‘Greenback’ struggled at the start of the week as a record ISM non-manufacturing PMI boosted market risk appetite which weighed on demand for the safe-haven US Dollar.

Looking to the remainder of this week the focus for USD investors is likely to be on the minutes from the Federal Reserve’s latest policy meeting. Will a reinforcing of the Fed’s dovish bias dent demand for the US Dollar?

Canadian Dollar (CAD) Subdued as Oil Slips below $60

The Canadian Dollar (CAD) was mostly muted in the tail end of last week’s session as oil prices stalled at $60 a barrel, and have since fallen below $60.

Australian Dollar (AUD) Weakens on Risk-Off Trade as RBA Maintains Stance

The Australian Dollar (AUD) failed to make sustained gains following the Reserve Bank of Australia’s (RBA) latest rate decision.

While the RBA left rates unchanged and maintained its dovish policy stance, briefly supporting AUD exchange rates, the Australian Dollar has weakened amid a softer risk market tone.

New Zealand Dollar (NZD) Falls amid Cautious Market Mood

After finding support amid a risk-on tone at the start of the week, the New Zealand Dollar (NZD) has since retreated as risk appetite cooled on Tuesday.

Data Releases

10:00 EUR Unemployment Rate (Feb)

15:00 USD JOLTs Job Openings (Feb)

Matthew Andrews

Contact Matthew Andrews