Pound Muted amid Coronavirus Concerns
The Pound (GBP) was subdued at the start of this week’s session as the currency continued to face headwinds over domestic coronavirus concerns.
While the GBP/USD exchange rate held steady, the Pound Euro exchange rate slipped to a one-week low.
Recent data has pointed to a modest rise in new cases, with GBP investors fearing the spread of the Indian variant could force the government to rethink its roadmap for easing lockdown measures next month.
Looking ahead, the Confederation of British Industry (CBI) will publish its latest distributive trade index later this morning. Will another strong lift in UK retail sales volumes this month help to prop up Sterling today?
Euro Buoyed by Upbeat Sentiment
The Euro (EUR) firmed on Monday, with the single currency attracting investors amidst an upbeat market mood and hopes for a swift economic recovery in the Eurozone.
This is tied to the EU’s continued acceleration of its vaccine rollout and hopes that most countries will be able to lift all economic restrictions by the summer.
Germany’s latest GDP figures may put some pressure on the Euro today as the finalised reading for the first quarter came in slightly below expectations.
However, Germany’s business climate index could allow for a rebound in EUR exchange rates as business morale improved more-than-expected this month.
US Dollar Dented by Falling Yields
The US Dollar (USD) was on the defensive during yesterday’s session in response to falling US Treasury yields.
Further limiting demand for the US Dollar were comments from Federal Reserve Governor Lael Brainard, in which she reiterated the Fed’s stance that the current surge in inflation is ‘transitory’.
In the absence of any notable US economic releases today, the safe-haven US Dollar may continue to struggle, assuming market sentiment continues to improve.
Canadian Dollar Buoyed by Rising Oil Prices
The Canadian Dollar (CAD) ticked higher on Monday as the appeal of the commodity-linked ‘Loonie’ was bolstered by an almost 2% jump in WTI oil prices to over $64 a barrel.
Australian Dollar Firms in Upbeat Trade
The Australian Dollar (AUD) trended higher overnight on Monday as market risk-appetite was bolstered by rising equities and commodities, as well as a pullback in the US Dollar.
New Zealand Dollar Gains ahead of RBNZ Meeting
The New Zealand Dollar (NZD) also firmed in overnight trade, with the ‘Kiwi’ also benefiting from the risk-on tone ahead of the Reserve Bank of New Zealand’s (RBNZ) latest rate decision.
No policy changes are expected from the RBNZ when it concludes its latest meeting later tonight, but will an optimistic outlook help to buoy NZD exchange rates?
Data Releases
09:00 EUR German Ifo Business Climate (May)
11:00 GBP CBI Distributive Trades (May)
03:00 NZD RBNZ Rate Decision