Pound (GBP) Firms following Boris Johnson’s Resignation
The Pound (GBP) strengthened yesterday as Prime Minister Boris Johnson resigned as leader of the Conservative Party.
Johnson’s resignation heralds an end to months of political uncertainty in the UK, with GBP investors now hopeful that a new leader can focus on the country’s economy without the distraction of multiple scandals. Markets were also relieved that the PM agreed to resign, lessening the likelihood of a messy coup.
However, the saga isn’t over yet. Johnson wants to stay on as PM until a new leader is elected, but some in his party may try to force him out of No 10. Therefore, we could see some volatility in the Pound. Meanwhile, a slowdown in the UK jobs market may weigh on Sterling.
Euro (EUR) Falls amid Ongoing Gas Supply Fears
The Euro (EUR) fell further yesterday as European energy security fears continue to hurt the single currency. Markets are increasingly concerned that Russia will cut gas supplies in the winter, which would likely cause tremendous economic damage across the continent.
Hawkish meeting minutes from the European Central Bank (ECB) failed to provide much support. Although the minutes showed that some officials favour a 50-bp rate rise this month, markets remain concerned about financial instability in the Eurozone. Reports suggest that the ECB’s new anti-crisis tool will not be ready for the July rate decision.
This afternoon, ECB President Christine Lagarde will deliver a speech. Could she alleviate investors’ fears?
US Dollar (USD) Retreats amid Risk-On Mood
The US Dollar (USD) ticked lower yesterday as a surprisingly upbeat market mood saw investors ditch the safe-haven Dollar for riskier currencies.
That said, worries about an impending global recession and expectations of further rate rises from the Federal Reserve underpinned USD, limiting its losses.
The US non-farm payrolls figures and unemployment rate are in focus today. Continued strength in the American labour market could push the US Dollar higher.
Canadian Dollar (CAD) Finds Success as Oil Rises
The Canadian Dollar (CAD) gained against some of its peers yesterday as a jump in oil prices boosted the commodity-linked ‘Loonie’.
Today, Canada’s latest unemployment rate could affect CAD. Economists expect it to hold steady, so any surprise results could have a significant impact.
Australian Dollar (AUD) Wavers amid Mixed News from China
The Australian Dollar (AUD) was mixed in overnight trade amid a lukewarm mood in Asian markets. Worries about rising Covid cases in China offset hopes that Beijing will announce more fiscal stimulus soon.
New Zealand Dollar (NZD) Wobbles on Tepid Market Mood
Likewise, the risk-sensitive New Zealand Dollar (NZD) traded without a clear direction overnight due to the mixed market mood.