US Dollar Softens ahead of Expected Fed Rate Hike

Pound (GBP) Buoyed by Improving Market Mood

The Pound (GBP) ticked broadly higher during yesterday’s session, with the currency benefitting from improved market sentiment.

Aiding Sterling ascent was the UK’s latest manufacturing PMI, as April’s finalised figures were revised higher.

Looking ahead, movement in the Pound could be highly limited today, with GBP investors likely reluctant to make any aggressive bets ahead of the Bank of England’s (BoE) impending interest rate decision.

Euro (EUR) Firms amid USD Weakness

The Euro (EUR) initially stumbled on Tuesday as EUR investors were left disappointing by the Eurozone’s latest jobs figures.

However, the single currency was later able to bounce back as its negative correlation with the US Dollar propped up demand.

Turning to today’s session the focus for EUR investors will be on the Eurozone’s retail sales figures, where a contraction in sales growth in March could dent the Euro’s prospects.

US Dollar (USD) Weakens as US Yields Drop

The US Dollar (USD) weakened yesterday, with the currency being undermined by risk-on flows and a fall in US Treasury yields.

This drop in the ‘Greenback’ came in spite of a much stronger-than-expected uptick in US factory orders in March.

There is a slew of notable USD data releases scheduled to be published today. However, it seems safe to assume these will be largely overshadowed by the Federal Reserve’s latest interest rate decision.

The Fed is widely expected to deliver a 50bps hike this evening. Alongside some hawkish forward guidance could this propel the US Dollar higher?

Canadian Dollar (CAD) Subdued as Oil Prices Drop

The Canadian Dollar (CAD) struggled to attract support on Tuesday, with the appeal of the commodity-linked currency being undermined by a downturn in oil prices.

The ‘Loonie’ could recoup some of these losses later today however as Canada is expected to report its trade surplus expanded in March.

Australian Dollar (AUD) Buoyed by Upbeat Retail Sales Release

The Australian Dollar (AUD) ticked higher again overnight on Tuesday, with the currency being buoyed by the release of Australia’s latest retail sales figures after sales growth fell much less than expected in March.

New Zealand Dollar (NZD) Flat as Unemployment Holds Steady

The New Zealand Dollar (NZD) traded in a narrow range during today’s Asian trading session after New Zealand’s latest jobs figures reported no change to the unemployment rate in the first quarter of 2022.

Matthew Andrews

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