Pound Slips despite Positive Inflation Figures
The Pound (GBP) initially strengthened yesterday, as the currency received a modest boost following a sharper-than-expected pickup in domestic inflation through April.
However these gains quickly faded as Sterling experienced some profit taking, with analysts suggesting the Pound was overbought after the GBP/USD exchange rate struck a two-month high earlier this week.
Looking ahead, GBP exchange rates could mount a recovery today if the Confederation of British Industry reports that its industrial orders index finally turned positive this month.
Euro Flat as Core Inflation Misses
The Euro (EUR) struggled for direction on Wednesday following the publication of the Eurozone’s Consumer Price Index (CPI).
While headline inflation in the bloc rose in line with projections last month, April’s final core reading printed slight below expectations, limiting the Euro’s upside potential.
Turning to the second half of this week, the focus for EUR investors will be on the Eurozone’s latest PMI figures, with the Euro likely to move higher if May’s preliminary releases show an improvement in economic activity in the bloc’s private sector.
US Dollar Jumps on FOMC Minutes
The US Dollar (USD) opened yesterday’s session on the front foot, with the ‘Greenback’ appreciating in step with US Treasury yields.
This upswing in USD exchange rates was then reinforced by the minutes from the Federal Reserve’s latest policy meeting.
The minutes saw policymakers suggest that it would be appropriate ‘at some point’ to start discussing how to taper its bond purchases, with the more hawkish than expected tone bolstering the US Dollar.
In the spotlight today we have last week’s US jobless claims. Will a sustained fall in new claims help to propel the US Dollar higher this afternoon?
Canadian Dollar Weakens as Sliding Oil Prices Undermine CPI Figures
The Canadian Dollar (CAD) experienced modest losses on Wednesday, as a sharper-than-expected rise in domestic inflation was offset by a notable drop in oil prices, which capped the appeal of the commodity-linked ‘Loonie’.
Australian Dollar Firms as Unemployment Rate Continues to Fall
The Australian Dollar (AUD) struck higher overnight on Wednesday, with a surprise fall in Australia’s unemployment rate in April lifting the ‘Aussie’, in spite of a worrying fall in employment growth.
New Zealand Dollar Lifted by Budget Forecasts
The New Zealand Dollar (NZD) also appreciated in overnight trade. The ‘Kiwi’ benefitting from the unveiling of New Zealand’s budget after it upwardly revised its GDP forecast for 2021.
Data Releases
10:05 GBP BoE Cunliffe Speech
11:00 GBP CBI Industrial Trends Orders (May)
13:30 USD Initial Jobless Claims (15/May)