US Dollar Strength Persists amid Anxious Market Mood

US Dollar (USD) Gains as Sentiment Sours

The US Dollar (USD) strengthened yesterday as risk aversion gripped markets amid growth concerns, inflation fears and a fresh Covid outbreak in China.

In addition, last week’s hot US CPI weighed on risk appetite and supported USD. With American inflation hitting a new 40-year high, the Federal Reserve may continue to hike interest rates.

This afternoon, the latest American PPI data is out. Will ongoing price pressures further fuel Fed rate hike bets?

Pound (GBP) Declines on GDP and Brexit Fears

The Pound (GBP) stumbled yesterday after the latest UK GDP data revealed an unexpected contraction in April.

Additionally, Brexit tensions hurt Sterling. As the government prepared to publish plans to scrap parts of the Northern Ireland protocol, worries of souring trade relations between the EU and the UK dented GBP.

This morning, the UK unemployment rate unexpectedly rose from 3.7% to 3.8%. Meanwhile, real pay continues to lag behind inflation. This could put some pressure on the Pound today.

Euro (EUR) Subdued in Absence of Data

The Euro (EUR) softened against many of its peers yesterday as a lack of Eurozone data left the single currency without much support.

Meanwhile, a stronger US Dollar weighed on EUR by way of the currencies’ negative correlation.

Germany’s latest ZEW economic sentiment index is set to show a marked improvement later this morning, although economists expect it to remain in negative figures. Will it be enough to boost EUR?

Canadian Dollar (CAD) Rudderless amid Thin Trading Conditions

The Canadian Dollar (CAD) was mixed yesterday as a lack of Canadian data and sideways movement in the oil market left the crude-linked currency without a clear direction.

With no notable Canadian data on the calendar today, oil price dynamics could drive CAD movement.

Australian Dollar (AUD) Ticks Higher as Risk Appetite Tentatively Returns

The Australian Dollar (AUD) edged higher overnight as the market mood showed a modest recovery from yesterday’s rout.

New Zealand Dollar (NZD) Firms as Market Pessimism Fades

Likewise, the risky New Zealand Dollar (NZD) inched up in overnight trade as a slight improvement in risk appetite supported the ‘Kiwi’.

Samuel Birnie

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