Euro Plummets as Eurozone Suffers Double-Dip Recession

Pound Dented as Boris Johnson under Scrutiny

The Pound was on the back foot at the end of last week amidst growing concerns over the ‘cash for curtains’ scandal, which has seen the Electoral Commission launch a formal inquiry into the PM.

The scandal threatens to hurt the Conservative party in this week’s local and Scottish elections, and could also distract the government from its recovery efforts.

However, the Pound recouped some ground at the start of this week’s session amidst UK economic optimism.

In the spotlight for GBP investors this week will be the Bank of England’s (BoE) latest rate decision. No policy changes are expected from the bank this month, but the Pound could receive a shot in the arm if the BoE upgrades its annual growth forecasts amidst the surge in consumer spending since the UK reopened its economy last month.

Euro US Dollar Exchange Rate Slumps as Eurozone Suffers Double-Dip Recession

The Euro ticked lower on Friday as the Eurozone’s latest GDP figures revealed growth in the bloc contracted again in the first quarter of 2021.

While the slump in growth was smaller than expected, with a contraction of 0.6% against a forecast 0.8% decline, confirmation that the bloc slipped into a double-dip recession over the winter was enough to dent EUR sentiment.

The growth contraction caused the Euro US Dollar exchange rate to sharply retreat below $1.21 and is struggling to hold $1.20 so far today.

Looking to the remainder of this week, Germany’s latest Industrial figures could offer some support to the Euro if they print positively towards the end of the session.

US Dollar Firms as US Consumer Spending Skyrockets

The US Dollar struck higher at the end of last week’s session, as softening risk appetite and a massive surge in US consumer spending in March bolstered the ‘Greenback’.

USD exchange rates then stumbled on Monday as a fall in US Treasury yields undermined the latest ISM manufacturing PMI, which reported another record expansion of the US factory sector last month.

Still to come in the first half of this week is the publication of the ISM non-manufacturing PMI, which could provide a further boost to the US Dollar if the service sector also sees a bumper expansion.

Canadian Dollar Firms in Spite of Underwhelming GDP Release

The Canadian Dollar ticked higher on Friday, with CAD investors appearing to shrug off Canada’s weaker-than-expected monthly GDP print as they remain confident this won’t alter the Bank of Canada’s hawkish bias.

Australian Dollar Supported by RBA Optimism

The Australian Dollar held its ground overnight on Monday, with the Reserve Bank of Australia’s (RBA) cautious optimism following its latest policy meeting helping to counteract some weaker-than-expected domestic trade figures.

New Zealand Dollar Stumbles in Risk-Off Trade

The New Zealand Dollar weakened in overnight trade, with investors shunning the risk-sensitive ‘Kiwi’ amidst a prevailing risk-off mood.

Looking ahead, the New Zealand Dollar could receive a boost later this evening if New Zealand’s latest jobs figures report domestic unemployment fell again in the first quarter of 2021.

Data Releases

09:30 GBP Manufacturing PMI (Apr)

13:30 CAD Trade Balance (Mar)

13:30 USD Trade Balance (Mar)

15:00 USD Factory Orders (Mar)

23:45 NZD Unemployment Rate (Q1)

Matthew Andrews

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