EUR/USD Gains as US Dollar Slips on Drop in Treasury Yields

Pound Muted on Coronavirus Concerns

The Pound (GBP) was left rangebound through most of yesterday’s trading session in the wake of comments from Boris Johnson in which he admitted his anxiety over the Indian variant of the coronavirus, while also refusing to rule out reintroducing regional restrictions in the future.

However, helping to limit the downside in Sterling were comments from the Bank of England’s (BoE) Andy Haldane, who suggested the UK economy will ‘power through in the months ahead’.

In the absence of any notable GBP data releases, the Pound may remain primarily driven by UK coronavirus headlines, particularly amidst suggestions the final phase of lockdown easing could be delayed.

Euro Buoyed by Vaccine Optimism

The Euro (EUR) struck higher on Thursday, as the single currency was underpinned by the EU’s accelerating vaccine rollout and the resulting economic optimism.

The uptick in the Euro was also supported by its negative correlation with the US Dollar (USD) as the latter came under some selling pressure yesterday.

EUR investors will look to the minutes from the latest European Central Bank (ECB) meeting for fresh impetus today, as they look for any hints on whether the bank may begin tapering its bond purchases in the foreseeable future.

US Dollar Slips as Yields Fall

The US Dollar gave up some ground yesterday as a modest pullback in US Treasury yields resulted in the ‘Greenback’ relinquishing some of Wednesday’s inflation-inspired gains.

However, USD investors still welcomed the latest US jobless claims, after new claims were reported to have fallen to a new post-pandemic low last week.

Centre stage today will be the latest US retail sales figures. These could put some pressure on the US Dollar as economists forecast a sharp slowing of sales growth in April following March’s stimulus check driven boom.

Canadian Dollar Subdued as Oil Prices Tumble

The Canadian Dollar (CAD) ticked slightly lower on Thursday, as the appeal of the commodity-linked ‘Loonie’ was dented by routing oil prices, with WTI crude falling over 2.5% as the Colonial Pipeline resumed operations.

Australian Dollar Muted in Risk-Off Trade

The Australian Dollar (AUD) remained subdued overnight on Thursday, as tensions in the Middle East and negative coronavirus headlines sapped market sentiment and saw investors steer clear of the risk-sensitive ‘Aussie’.

New Zealand Dollar Weakened by Cautious Tone

The New Zealand Dollar (NZD) also held in a narrow range in overnight trade, as the high-yield ‘Kiwi’ also struggled to attract investors as a risk-off mood prevailed.

Data Releases

12:30 EUR ECB Minutes

13:30 USD Retail Sales (Apr)

15:00 USD Consumer Sentiment (May)

Matthew Andrews

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