Pound Buoyed by Drop in Unemployment
The Pound (GBP) firmed during yesterday’s trading session, as GBP investors welcomed a surprise drop in the UK’s unemployment rate following the country’s latest jobs report.
However, the upside in Sterling remained limited amidst ongoing concerns that the spread of the Indian variant of the coronavirus in the UK could disrupt the government’s roadmap out of lockdown.
Turning to today’s session, the UK’s consumer price index (CPI) could offer additional support for the Pound after a sharper-than-expected 1.5% acceleration of domestic inflation last month, more than doubling from March’s 0.7% reading.
Euro Rallies amid USD Weakness
The Euro (EUR) enjoyed solid support on Tuesday, with the single currency benefitting significantly from its negative correlation with the US Dollar (USD) as the latter suffered broad selling pressure.
The upside in the Euro also came courtesy of rising optimism within the Eurozone as more countries start to lift coronavirus restrictions and the EU’s vaccine rollout continues to accelerate.
Looking ahead, the Euro may continue to find support today, as the Eurozone’s final CPI release for April confirmed inflation in the bloc accelerated to a two-year high.
US Dollar Sinks in Upbeat Trade
The US Dollar was on the defensive through yesterday’s European trading session, as a prevailing risk-on mood sapped demand for the safe-haven currency.
USD sentiment was dented further by expectations that the Federal Reserve will maintain its ultra-accommodating monetary policy in spite of soaring inflationary pressures in the US.
With this in mind, the minutes from the Fed’s most recent policy meeting could pile more pressure on the US Dollar later this evening, assuming they will reinforce the bank’s current dovish bias.
Canadian Dollar Dips as Oil Prices Soften
The Canadian Dollar (CAD) ticked lower on Tuesday, as a modest drop in oil prices dampened demand for the commodity-linked currency.
Coming up, the release of Canada’s CPI figures could provide a boost for the ‘Loonie’ later this afternoon, as a sharp acceleration of inflation could reinforce the Bank of Canada’s (BoC) current hawkish stance.
Australian Dollar Slips as Consumer Morale Weakens
The Australian Dollar (AUD) dipped overnight on Tuesday after the Westpac consumer sentiment index reported a drop in consumer morale this month.
New Zealand Dollar Dented by Souring Market Mood
The New Zealand Dollar (NZD) also retreated in overnight trade, as a souring of market sentiment limited the appeal of the risk-sensitive ‘Kiwi’.
Data Releases
10:00 EUR Inflation Rate (Apr)
13:30 CAD Inflation Rate (Apr)
19:00 USD FOMC Minutes
20th May
02:30 AUD Unemployment Rate (Apr)
03:00 NZD Annual Budget Release