Pound Dented by Election Jitters
The Pound initially rallied on Tuesday, with the currency attracting support after the UK’s latest manufacturing PMI printed above expectations in April.
However, Sterling failed to sustain these gains as jitters over the upcoming Scottish parliamentary elections took their toll on GBP exchange rates through the second half of the session.
Looking ahead, any movement in the Pound may remain limited today, with GBP investors likely to be reluctant to make any aggressive bets ahead of tomorrow’s Bank of England (BoE) rate decision and Scottish election.
Euro Undermined by USD Strength
The Euro was mostly muted yesterday, amid a lack of impactful EUR data.
Instead, the single currency was driven by its negative correlation with the US Dollar (USD), which left it on the defensive as the latter strengthened.
Coming up, EUR investors will look to the Eurozone’s latest services PMI for fresh impetus this morning.
US Dollar Bolstered by Safe-Haven Demand
The US Dollar struck higher through yesterday’s European trading session, as a slump in equity markets drove a risk-off mood that bolstered the safe-haven ‘Greenback’.
This upside in the US Dollar was further bolstered by growing hopes that the US will enjoy a relatively swift economic recovery this year.
This optimism could be further reinforced by the latest ISM non-manufacturing PMI this afternoon, with USD exchange rates potentially accelerating even faster if the US service sector reports that activity continued to rise in April, following on from March’s record expansion.
Canadian Dollar Muted despite Strong Oil Prices
The Canadian Dollar struggled to find support on Tuesday, with the oil-sensitive ‘Loonie’ unable to rally on the back of rising WTI crude prices amid growing concerns over Canada’s third wave of coronavirus cases.
Australian Dollar Fluctuates amid Mixed Risk Sentiment
The Australian Dollar traded in a wide range overnight on Tuesday, with the ‘Aussie’ initially rising on a modest improvement in risk sentiment, before quickly retreating again as the US Dollar began to strengthen again.
New Zealand Dollar Buoyed by Drop in Unemployment
The New Zealand Dollar trended higher in overnight trade in response to New Zealand’s latest jobs figures, which reported a surprise drop in unemployment in the first quarter of 2021.
Data Releases
09:00 EUR Services PMI (Apr)
13:15 USD ADP Employment Change (Apr)
15:00 USD ISM Non-Manufacturing PMI (Apr)