Euro (EUR) Soars amid Renewed ECB Rate Rise Bets
As European financial markets continued to stabilise yesterday, the Euro (EUR) surged higher.
Bets on further rate rises from the European Central Bank (ECB) added to the single currency’s upside. Policymaker Pablo Hernandez de Cos added his voice to a chorus of rate setters calling for more hikes.
ECB policy expectations could continue to drive EUR movement this morning. The bank’s President Christine Lagarde and Chief Economist Philip Lane are both due to speak. More hawkish comments could lift the Euro.
Pound (GBP) Softens on Prospect of BoE Policy Pause
Yesterday, the Pound (GBP) faced some selling pressure as GBP investors grew cautious ahead of the Bank of England (BoE) policy decision tomorrow.
The possibility of the bank ending its tightening cycle weighed on Sterling. However, renewed confidence in European markets helped the Pound firm against its weaker rivals.
This morning, Sterling has already regained ground after UK inflation unexpectedly jumped, putting more pressure on the BoE to deliver another interest rate increase.
US Dollar (USD) Firms Ahead of Fed Decision
The US Dollar (USD) strengthened through the latter part of yesterday’s session, shrugging off an upbeat market mood that had dampened the safe-haven currency in the morning.
As the recent turmoil in the US banking sector receded, expectations of another Federal Reserve rate hike and rising US Treasury yields lifted the ‘Greenback’.
USD may be muted today as markets brace for the Fed decision. If the US central bank indicates its ongoing commitment to bringing down inflation, the ‘Greenback’ could climb. Conversely, a more cautious tone could dent the US Dollar.
Canadian Dollar (CAD) Undermined by Cooling CPI
A rise in oil prices initially lifted the commodity-linked Canadian Dollar (CAD) yesterday. However, cooler-than-forecast inflation data dented CAD in the afternoon.
Crude prices could continue to drive CAD exchange rates today. Later this evening, the Bank of Canada’s (BoC) policy meeting minutes may also impact the ‘Loonie’. Will a dovish tone among policymakers dent the Canadian Dollar?
Australian Dollar (AUD) Enjoys Risk-Positive Trade
The Australian Dollar (AUD) rose during overnight trade as an upbeat market mood lifted the risk-sensitive currency.
New Zealand Dollar (NZD) Heads Higher amid Cheery Sentiment
The New Zealand Dollar (NZD) also climbed last night as the positive tone among investors buoyed the risky ‘Kiwi’.