Pound Undermined by Political Uncertainty
The Pound was left subdued through yesterday’s trading session as a result of some political uncertainty in the UK.
This came in response to the news of the UK’s Electoral Commission launching a formal inquiry into how Boris Johnson funded the refurbishment of his Downing Street flat, which could impact the Conservatives performance in next week’s local elections.
With UK data still thin on the ground, GBP investors are likely to remain focused on domestic politics, as the upcoming Scottish election also threatens to stoke some volatility.
EUR Stabilises on Lagarde Comments, Euro US Dollar Hits Two-Month High
The Euro initially stumbled on Wednesday after Germany reported a shock fall in consumer confidence going into May.
However, EUR exchange rates clawed back these losses later in the day and the Euro US Dollar exchange rate hit a two-month high.
Comments from European Central Bank (ECB) President Christine Lagarde fuelled EUR gains after suggesting there is ‘light at the end of the tunnel’ and that the Eurozone ‘could see a robust economic rebound in the second half of the year’.
Looking ahead, the focus for EUR investors today will be on the publication of Germany’s consumer price index. Will another acceleration of domestic inflation reflect positively on the Euro?
US Dollar Nosedives Following Fed Rate Decision
The US Dollar opened yesterday’s European session on solid footing as a bearish mood saw investors favour the safe-haven currency.
However, the ‘Greenback’ then plummeted following the Federal Reserve’s latest policy meeting.
The Fed left interest rates on hold as expected this month, but also struck a very dovish tone in its forward guidance, with the bank stressing any pickup in inflation is transitory and that the US economy has a ‘long way to go’ on the road to recovery.
Centre stage today will be the latest US GDP figures. The preliminary release is expected to report that the US economic recovery continued to gather pace in the first quarter of 2021 and could boost the US Dollar this afternoon.
Canadian Dollar Bolstered by Strong Retail Sales Release
The Canadian Dollar rallied on Wednesday as CAD investors welcomed a strengthening of oil prices and a stronger-than-expected rebound in domestic retail sales, with sales growth surging from –1.1% to 4.8%.
Australian Dollar Retreats amid Profit Taking
After soaring on Wednesday evening, the Australian Dollar (AUD) found itself retreating overnight, with the currency suffering from a bout of profit taking.
New Zealand Dollar Dented by Narrowing of Trade Surplus
The New Zealand Dollar also trended lower overnight on Wednesday, with the currency facing some headwinds after New Zealand’s latest trade figures reported a sharp narrowing of the country’s trade surplus.
10:00 EUR Economic Sentiment (Apr)
13:00 EUR German Inflation Rate (Apr)
13:30 USD GDP (Q1)