Pound (GBP) Subdued amid Political Uncertainty
The Pound (GBP) traded without any strong directional bias yesterday, GBP investors being unnerved amid rising political uncertainty as more Conservative MPs joined the race to replace Boris Johnson.
The cautious market mood further suppressed Sterling sentiment at the start of the week.
Turning to today’s session its likely the Pound may continue to struggle so long as the focus remains on the Tory leadership race.
Euro (EUR) Plunges amid Considerable USD Strength
The Euro (EUR) remained on the defensive on Monday as the single currency’s negative correlation with the US Dollar (USD) saw it soften as the latter strengthened, with the EUR/USD exchange rate coming perilously close to parity.
Also pressuring EUR exchange rates were suggestions that the recent cut in Russian gas exports to Germany may become permanent.
Coming up the focus for EUR investors today will be on publication of Germany’s latest ZEW index. Will a plunge in economic sentiment this month push the Euro lower?
US Dollar (USD) Bolstered by Fed Rate Hike Bets
The US Dollar got off to a roaring start this week, bolstered by aggressive Federal Reserve rate hike bets in the wake of Friday’s stronger-than-expected US payroll figures.
This upside in the ‘Greenback’ was reinforced by Chinese Covid concerns, amid fears a recent rise in cases could see some parts of China reimpose lockdown restrictions.
Looking ahead, so long as the risk-off mood continues to prevail we may see the US Dollar maintain its bullish trajectory.
Canadian Dollar (CAD) Firms despite Sliding Oil Prices
The Canadian Dollar (CAD) trended higher on Monday. The commodity-linked currency firming in spite of a sizeable fall in oil prices.
Australian Dollar (AUD) Slides in Risk-Off Trade
The Australian Dollar (AUD) remained on the defensive overnight on Monday, with skittish investors steering clear of the risk-sensitive ‘Aussie’.
New Zealand Dollar (NZD) Undermined by Gloomy Mood
The New Zealand Dollar (NZD) also trended lower in overnight trade as a risk-adverse mood prevailed.
The Reserve Bank of New Zealand (RBNZ) is set to deliver its latest interest rate decision later tonight. Will a 50bps hike and some hawkish forward guidance help to revive demand for the ‘Kiwi’?