Pound Slips on Brexit Concerns
The Pound (GBP) remained pressured through yesterday’s session, and GBP/EUR fell to a two-week low in response to renewed Brexit friction between the UK and EU regarding the Northern Ireland protocol.
While Boris Johnson seeks to remove border checks on the Irish Sea, European Commission President Ursula von der Leyen has rejected any changes to the agreement signed in December, leaving talks regarding the service sector in limbo.
Looking ahead, with the Brexit deadlock unlikely to be broken anytime soon and coronavirus cases on the rise in the UK, Sterling could face an uphill battle today.
Euro Firms on Strong German Business Sentiment
The Euro (EUR) caught some bids on Tuesday as Germany’s IFO survey on business climate printed above expectations, with business morale in May rising to a two-year high.
This offset Germany’s GDP figures earlier in the morning, as the finalised figures revealed a larger-than-expected contraction of domestic growth in the first quarter of 2021.
While EUR data releases are thin on the ground today, the Euro may maintain its upward trajectory as growth prospects in the Eurozone continues to be bolstered by the reopening of more countries and the EU’s vaccine rollout.
US Dollar Dented by Fed Expectations
The US Dollar (USD) trended broadly lower through yesterday’s European trading session, with demand for the ‘Greenback’ being undermined by expectations the Federal Reserve will maintain its accommodative stance for the time being.
This was reinforced by comments from Chicago Fed President Charles Evans, who dismissed concerns about the acceleration of US inflation, suggesting that the ‘recent increase in inflation is not a precursor of undesirably high inflation’.
Looking ahead, so long as market sentiment remains broadly bullish it’s likely we could see the recent USD selling bias remain firmly in place through today’s session.
Canadian Dollar Steady as Oil Holds at $65
The Canadian Dollar (CAD) traded in a narrow range on Tuesday, with the oil-sensitive currency moving sideways as WTI crude prices held at $65 a barrel.
AUD Strengthens in Upbeat Trade
The Australian Dollar (AUD) struck higher overnight on Tuesday, with the ‘Aussie’ catching bids amidst a prevailing risk-on mood, rising commodity prices and a weaker US Dollar.
New Zealand Dollar Surges on Hawkish RBNZ
The New Zealand Dollar (NZD) exploded higher in overnight trade, with NZD exchange rates soaring over 1% in the wake of the Reserve Bank of New Zealand’s (RBNZ) latest policy meeting.
While it left its monetary policy unchanged as expected, the RBNZ surprised investors by signalling plans to start raising interest rates from mid-2022.