Euro (EUR) Roars Higher on GDP Growth
The Euro (EUR) surged higher yesterday after a steep upward revision to the Eurozone’s latest GDP growth rate estimate. The third estimate printed at 0.6%, double the previous 0.3%.
Ahead of today’s European Central Bank (ECB) meeting, these strong results boosted rate rise bets.
Today, the ECB decision is in focus. Markets are eager to gauge how much the bank will raise rates by in its July and September meetings. If ECB President Christine Lagarde pushes back on expectations of a 50-bps hike, EUR could slip.
Pound (GBP) Slips on Stagnation Fears
The Pound (GBP) fell yesterday as fears about the future of the UK economy played on investors’ minds once again.
In its latest economic outlook, the Organisation for Economic Co-Operation and Development (OECD) slashed growth forecasts for the UK. The OECD now expects the UK economy to stagnate next year as the cost-of-living crunch deepens.
Last night, the British Chambers of Commerce (BCC) echoed this dismal assessment, saying that the UK economy will ‘grind to a halt’ before shrinking later this year. As a result, Sterling could slip further today.
US Dollar (USD) Stumbles on EUR Strength
The US Dollar (USD) initially ticked higher yesterday as a risk-off mood increased the appeal of the safe-haven currency.
However, the jump in the Euro following the Eurozone GDP took the shine off USD somewhat. EUR/USD is the most traded currency pair, and with the policy gap between the Federal Reserve and the ECB likely to narrow, traders seem to have sold the ‘Greenback’ to buy the single currency.
Today it will be interesting to see how the ECB decision impacts the US Dollar. Meanwhile, risk appetite will also likely affect USD exchange rates.
Canadian Dollar (CAD) Mixed as Oil Prices See-Saw
The commodity-linked Canadian Dollar (CAD) was mixed yesterday as fluctuations in the oil market left the ‘Loonie’ without a clear direction.
Looking ahead, speeches from the Bank of Canada (BoC) Governor and Senior Deputy Governor could cause some movement. Will hawkish comments boost CAD?
Australian Dollar (AUD) Dips on Economic Concerns
The Australian Dollar (AUD) fell in overnight trade amid warnings that aggressive rate hikes from the Reserve Bank of Australia (RBA) could slow the Australian economy.
New Zealand Dollar (NZD) Subdued amid Market Caution
The New Zealand Dollar (NZD) traded in a narrow range overnight as a muted market mood left the risk-sensitive ‘Kiwi’ without a clear direction.