Pound (GBP) Rocked by Lockdown Rumours
The Pound (GBP) fell against many of its rivals yesterday as markets digested weekend reports that the UK could tighten Covid restrictions.
Later reports that Boris Johnson would not implement new Covid measures before Christmas did little to support GBP, as a post-Christmas lockdown remains on the cards.
Looking ahead, Covid headlines may continue to dog the Pound. The latest Confederation of British Industry (CBI) distributive trades data may also hurt Sterling, as economists expect a large drop this month.
Euro (EUR) Gains on USD Weakness
The Euro (EUR) firmed against most of its rivals yesterday as the single currency benefitted from its negative correlation to a weakening US Dollar (USD).
EUR also enjoyed its reputation as a safer investment, as traders avoided riskier assets amid the prevailing risk-off market mood.
This morning, the German consumer confidence indicator plunged to -6.8, much lower than analysts expected. As a result, EUR could struggle.
US Dollar (USD) Dented by Falling Treasury Yields
The US Dollar (USD) was on the defensive against most of its peers on Monday as falling US Treasury yields undermined the ‘Greenback’.
USD’s status as a safe-haven currency may have limited the losses: the rapidly spreading Omicron variant unnerved global markets.
A lack of market-moving data today could see the US Dollar once again influenced by Treasury yields and risk appetite.
Canadian Dollar (CAD) Struggles as Oil Prices Extend Losses
The commodity-linked Canadian Dollar (CAD) fell through yesterday’s session as the spread of Omicron continues to dent oil demand outlook.
CAD may find some support today from Canada’s latest retail sales data. Economists expect sales to have recovered in October.
Australian Dollar (AUD) Wavers on Mixed RBA Minutes
The Australian Dollar (AUD) was mixed overnight following the Reserve Bank of Australia’s (RBA) latest meeting minutes, which were dovish but also displayed cautious optimism.
While the RBA remains committed to loose monetary policy, it also does not expect Omicron to derail Australia’s economic recovery.
New Zealand Dollar (NZD) Gains as Risk Appetite Improves
The New Zealand Dollar (NZD) firmed in overnight trade as a more bullish market mood supported the risk-sensitive ‘Kiwi’.