Euro Weakens as ECB Signal’s Interest Rates to Remain on Hold for Longer

Pound (GBP) Firms on Positive UK Data 

The Pound (GBP) strengthened yesterday as GBP investors remained upbeat about the UK economy, despite the current coronavirus situation. 

The Confederation of British Industry’s industrial trends orders and business optimism index painted an overall positive picture of the UK economy, with factory output and orders surging. However, concerns over staff and supply shortages tempered the upbeat outlook. 

This morning’s retail sales report showed a small recovery of 0.5%, just above expectations, which could support Sterling as the day unfolds. Later on, any surprise results from the UK’s flash PMIs could prompt some movement in the Pound. 

Euro (EUR) Dips on Vague ECB Forward Guidance  

The Euro (EUR) spiked yesterday afternoon before dropping back down, trending lower overall against most of its major rivals, following the European Central Bank’s (ECB) latest interest rate decision. 

As expected, the ECB left interest rates unchanged. But its vague forward guidance disappointed EUR investors. 

In addition, the Eurozone’s latest consumer confidence report showed an unexpected drop in sentiment, which also weighed on the Euro. 

Turning to today, both Germany’s and the Eurozone’s manufacturing and services PMIs exceeded expectations, which may bolster the single currency.  

US Dollar (USD) Muted amid Risk-On Mood 

The US Dollar (USD) was fairly subdued through yesterday’s session, as the recent increase in risk appetite dampened demand for the safe-haven currency. 

The latest unemployment data may also have weighed on the US Dollar, with initial jobless claims unexpectedly increasing. 

Looking ahead, a forecast increase in the US Markit services PMI could potentially lend support to USD. 

Canadian Dollar (CAD) Rangebound as Oil Holds Steady 

The Canadian Dollar (CAD) traded in a narrow range yesterday, with the oil-sensitive ‘Loonie’ kept steady by stable oil prices. 

Canada’s retail sales figures this afternoon may dent the currency, as sales are expected to fall again by 3%. 

Australian Dollar (AUD) Dented by Dismal PMIs 

The Australian Dollar (AUD) slipped overnight, as the Markit PMIs both revealed larger-than-expected drops in business activity. Services took a particularly big hit, due to Australia’s recent lockdown measures. 

New Zealand Dollar (NZD) Softens on Souring Market Sentiment 

The New Zealand Dollar (NZD) trended lower in overnight trade, as a slight shift in risk sentiment sapped demand for the ‘Kiwi’.