Euro and US Dollar Choppy amid ECB and Fed Meetings

Pound (GBP) Rebounds as Market Sentiment Improves

The Pound (GBP) recovered from Tuesday’s slump yesterday as a rally in European markets supported the risk-sensitive UK currency.

Sterling may also have benefitted from some dip-buying after hitting multi-year lows against some of its peers in overnight trade.

Today, policymakers at the Bank of England (BoE) meet to set interest rates. Markets expect a 25-bps rate rise alongside gloomier forecasts for the UK economy. Will Sterling slip?

Euro (EUR) Rises and Falls on ECB Meeting

The Euro (EUR) initially strengthened yesterday after the European Central Bank (ECB) convened for an impromptu meeting to address financial instability in the Eurozone due to planned rate rises.

However, markets seemed disappointed by the outcome of the ECB meeting, causing EUR to reverse its gains.

With notable Eurozone data thin on the ground today, the Euro could struggle for a clear direction.

US Dollar (USD) Fluctuates as Fed Raises Rates by 0.75%

The US Dollar (USD) ticked lower yesterday, falling further from recent highs, as an upbeat market mood dampened the appeal of the safe-haven currency.

Downbeat retail sales figures in the afternoon had little effect on USD, as investors awaited the Federal Reserve decision.

In the evening, the Fed raised rates by 75 basis points – its largest hike since 1994. However, the US central bank’s forward guidance was less hawkish than anticipated. USD spiked before slipping.

Still, the move seems to have spooked global markets. If the bearish mood continues today, the US Dollar could climb.

Canadian Dollar (CAD) Softens as Oil Prices Fall

The Canadian Dollar (CAD) slipped against its stronger rivals yesterday as declining crude prices pressured the oil-linked ‘Loonie’.

In the absence of market-moving Canadian data today, oil price dynamics could continue to drive CAD exchange rates.

Australian Dollar (AUD) Moves Sideways despite Headwinds

The Australian Dollar (AUD) wavered overnight, showing some resilience despite a risk-off tone and downbeat Australian employment data.

New Zealand Dollar (NZD) Rangebound as Markets Mull Fed Hike

Likewise, the New Zealand Dollar (NZD) wobbled in overnight trade as markets digested the Fed decision.

Samuel Birnie

Contact Samuel Birnie


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