Pound Steady as UK Expands Vaccination Programme
The Pound (GBP) struggled to find any strong directional bias during yesterday’s session, although the Pound Euro exchange rate was able to rebound from a two-week low.
Sterling made modest gains following the UK’s move to extend its vaccination programme to anyone aged 30 and over.
This helped to offset concerns over a recent rise in coronavirus cases in the UK, which may have otherwise weighed on Sterling sentiment.
Looking ahead, with UK data still thin on the ground, we expect to see UK coronavirus developments continue to dictate the direction of GBP exchange rates through the second half of the week.
Euro Undermined by Profit Taking
The Euro (EUR) retreated on Wednesday, as the single currency fell victim to some profit taking amidst a prevailing risk-off mood.
Further undermining EUR exchange rates was the currency’s negative correlation with the US Dollar (USD), with the Euro slumping as the latter rebounded from its recent lows.
Turning to today’s session, EUR investors are likely to look to a speech by European Central Bank (ECB) Vice-President Luis de Guindos for fresh impetus.
US Dollar Firms in Risk-Off Trade
The US Dollar (USD) mounted a recovery on Wednesday, with a souring of market sentiment bolstering the appeal of the safe-haven currency through the European trading session.
The US Dollar’s gains were supported by comments from Federal Reserve policymaker Randal Quarles who suggested that inflation will ‘meet the bar’ for the Fed to start tapering its bond purchases later this year.
Looking ahead, the US Dollar may extend its recovery later this afternoon with the latest US durable goods orders release, as economists forecast goods orders will have risen again in April.
USD investors will also be keeping an eye on the latest US GDP estimate, which may also support the ‘Greenback’ if growth is revised higher in the first quarter of 2021.
Canadian Dollar Slides on Softer Oil Prices
The Canadian Dollar (CAD) was placed on the defensive yesterday as a dip in oil prices, with WTI crude slipping as much as 1% in European trade, weighed on the commodity-linked ‘Loonie’.
Australian Dollar Slips on Victoria Lockdown Announcement
The Australian Dollar (AUD) retreated overnight on Wednesday following the announcement of a new seven-day regional lockdown in Victoria in response to the discovery of a coronavirus cluster in Melbourne’s northern suburbs.
New Zealand Dollar Firms on Orr Comments
The New Zealand Dollar (NZD) edged higher in overnight trade as Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr reiterated the bank’s recent hawkish stance as he spoke before parliament’s Finance and Expenditure Committee.
Data Releases
10:45 EUR ECB Guindos Speech
12:00 GBP BoE Vlieghe Speech
13:30 USD Durable Goods Orders (Apr)
13:30 USD GDP (Q1)
13:30 USD Initial Jobless Claims (22/May)