Pound Firms amid Reopening Optimism
The Pound (GBP) firmed at the start of this week and hit a two-month high against the US Dollar following the latest easing of lockdown measures in the UK.
While GBP investors welcomed the reopening of a larger part of the UK economy, concerns over the spread of the Indian variant of the coronavirus and the threat it poses to the government’s roadmap for easing limited the upside potential of Sterling.
Looking ahead, the primary focus for GBP investors today will be the UK’s latest jobs report. Will the surprise drop in the unemployment rate to 4.8% help buoy the Pound this morning?
Euro Flat Despite Accelerating Vaccine Rollout
The Euro (EUR) was mostly muted on Monday as fresh coronavirus concerns and the absence of any notable EUR data releases tempered demand for the single currency.
This came in spite of EUR investors continuing to express optimism over the Eurozone’s potential for a strong economic rebound this year as the EU’s vaccine rollout continues to gather pace.
Coming up, the Euro may remain subdued this morning as the Eurozone publishes its latest GDP figures, which are set to confirm the bloc slipped into a double-dip recession in the first quarter of 2021.
US Dollar Muted as Fed’s Clarida Comments on Inflation
The US Dollar (USD) struggled to find any clear directional bias yesterday as an uptick in US Treasury yields was offset by comments from Federal Reserve Vice Chairman Richard Clarida.
Clarida suggested that the Fed need to be ‘attuned and attentive’ to data to ensure inflation remains transitory, and that the Fed would act if inflation expectations go higher, but is vague as to how high this might be.
In the absence of any notable US economic data today, any movement in the US Dollar is likely to be tied to market sentiment, potentially leading to USD exchange rates depreciating if sentiment continues to improve.
Canadian Dollar Steady as Oil Prices Rise
The Canadian Dollar (CAD) firmed on Monday as the appeal of the commodity-linked ‘Loonie’ received a modest boost as WTI oil prices rose toward $66 a barrel.
Australian Dollar Rises on RBA Minutes
The Australian Dollar (AUD) ticked higher overnight on Monday, with the ‘Aussie’ finding support from the release of the minutes from the Reserve Bank of Australia’s (RBA) latest policy meeting as the bank signalled its willingness to alter its bond purchases.
New Zealand Dollar Firms in Risk-On Trade
The New Zealand Dollar (NZD) rallied in overnight trade, as a prevailing risk-on mood helped to boost the appeal of the high-yield ‘Kiwi’.
Data Releases
10:00 EUR GDP (Q1)
10:00 EUR Employment Growth (Q1)
01:30 AUD Consumer Confidence (May)