Pound Climbs on Impressive Services Sector Growth
The Pound (GBP) advanced against many of its peers yesterday following the UK’s impressive services PMI, with the finalised figure showing that growth in the services sector reached a 24-year high last month.
The GBP upside inspired by the release was limited, however, as rising cases of coronavirus provide cause for concern despite Boris Johnson’s recent assertion that the UK is currently on track to lift all remaining restrictions by 21 June.
In the absence of any important data releases today, coronavirus developments could dominate GBP exchange rates, with any negative news having the potential to weigh on the Pound.
Euro Tumbles against Strong US Dollar
The Euro (EUR) was under pressure through yesterday’s trading session as a series of strong US data releases saw the single currency suffer due to its negative correlation with the US Dollar (USD).
These losses were tempered somewhat by the Eurozone’s final services PMI, which reported that the services sector was growing at its fastest pace in three years.
Turning to today, the Euro could face more challenges as the Eurozone’s latest retail sales figures are expected to show a contraction in consumer spending. A speech from European Central Bank President Christine Lagarde may also impact EUR. Investors will be watching to see if she maintains her dovish stance.
US Dollar Soars on Stellar Data Releases
The US Dollar surged following a trio of impressive US data releases, including the ISM non-manufacturing PMI, which reported record growth in the services sector.
USD investors were also cheered by employment data, with jobless claims continuing to fall and the ADP’s jobs report printing over 50% higher than expected, with 978,000 workers hired last month.
Looking ahead, the US Dollar could sustain its gains if this afternoon’s employment figures show further improvement in the US labour market.
In light of the positive US data releases, USD investors will also be looking for any hints that the Federal Reserve may look to tighten monetary policy in the upcoming speech from Fed Chair Jerome Powell.
Canadian Dollar Undermined by Demand for USD
The Canadian Dollar (CAD) had a mixed day of trading yesterday, with USD gains weighing on the oil-sensitive ‘Loonie’ despite WTI crude prices continuing to rise.
Today’s jobs figures could put further pressure on CAD if they show that Canadian unemployment continues to rise, though this may be offset by Canada’s Ivey PMI for May, which is expected to report an increase in economic growth.
Australian Dollar Slumps amid Risk-Off Market Mood
The Australian Dollar (AUD) ticked lower in overnight trade after slumping to an eight-month low against the Pound amid a bearish market mood and a strong US Dollar.
New Zealand Dollar Struggles in Cautious Trade
The New Zealand Dollar (NZD) was also on the defensive overnight, with appetite for the risk-sensitive ‘Kiwi’ dampened by the prevailing risk-off sentiment among investors.
Data Releases
10:00 EUR Retail Sales MoM (April)
12:00 EUR ECB President Lagarde Speech
12:00 USD Fed Chair Powell Speech
13:30 CAD Unemployment Rate (May)
13:30 USD Non Farm Payrolls (May)
15:00 CAD Ivey PMI (May)