Euro Rallies as Markets Price in ECB Rate Rise following Fed and BoE

Pound (GBP) Remains Muted following Post-BoE Plunge 

The Pound (GBP) was subdued on Friday as the Bank of England’s (BoE) bleak economic outlook following its interest rate decision continued to weigh on Sterling

However, since the Pound tumbled so dramatically following the BoE decision, it seemed as though Sterling had already bottomed out, which limited GBP’s losses. 

With UK economic data thin on the ground today, risk appetite could drive the risk-sensitive UK currency. In addition, any domestic political news could trigger some movement. 

Euro (EUR) Jumps on ECB Rate Rise Bets 

The Euro (EUR) surged higher on Friday as markets increased their bets for a European Central Bank (ECB) rate rise. 

Recently, the ECB has signalled that it could begin hiking rates as early as July. Following further rate rises from the Federal Reserve and the BoE, expectations that the ECB will follow suit increased, thereby boosting EUR. 

Amid a lack of Eurozone data today, EUR investors may instead focus on news on the Russia-Ukraine war. Vladimir Putin is due to address Russians today during the Victory Day parade. Some analysts fear he may use the event to declare all-out war, which could hit the Euro. 

US Dollar (USD) Rudderless as Markets Mull Mixed Data 

The US Dollar (USD) traded without a clear direction on Friday amid some mixed US jobs data. 

Although the US economy added more jobs than expected in April, the unemployment rate held at 3.6%, rather than dropping by 0.1 percentage points, as was forecast. 

A speech from Federal Reserve policymaker Raphael Bostic could cause some USD movement this afternoon. Until then, risk appetite may be the dominating factor. 

Canadian Dollar (CAD) Softens amid Mixed Jobs Reports 

The Canadian Dollar (CAD) also suffered some mixed employment results on Friday, causing CAD to slip. The unemployment rate fell as forecast, but full-time employment unexpectedly declined. In addition, the participation rate slipped from 65.4% to 65.3%. 

With no notable Canadian data due out today, crude prices could drive the oil-linked ‘Loonie’. 

Australian Dollar (AUD) Slips on Cautious Trade 

The Australian Dollar (AUD) fell overnight as a bearish mood swept markets, thereby denting the risk-sensitive ‘Aussie’. 

New Zealand Dollar (NZD) Falls amid Downbeat Mood 

The New Zealand Dollar (NZD) also declined in overnight trade as a souring market sentiment dampened NZD’s appeal. 

Samuel Birnie

Contact Samuel Birnie


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