US Dollar (USD) Softens amid Risk-On Mood
An upbeat tone in markets yesterday put the safe-haven US Dollar (USD) on the back foot, although rising US Treasury yields limited the currency’s losses.
USD investors also seemed hesitant ahead of today’s consumer price index, which may have restricted the US Dollar’s movement.
Economists expect today’s data to show a sharp easing in headline inflation, although the core rate is set to tick higher. Signs of persistently high underlying inflation could bolster USD.
Pound (GBP) Edges Up amid IMF Forecasts
The Pound (GBP) found some success yesterday after the International Monetary Fund (IMF) upgraded its forecast for the UK economy this year.
However, the IMF still expects Britain to experience a downturn in 2023, and this limited GBP’s upside potential.
Turning to today, a speech from Bank of England (BoE) Governor Andrew Bailey is in focus. If Bailey hints at the need for further interest rate rises, Sterling could strengthen.
Euro (EUR) Firms amid USD Weakness
The Euro (EUR) enjoyed its negative correlation to the US Dollar yesterday, with the latter currency weakening.
EUR saw its gains capped, however, after the latest Eurozone retail sales data revealed a 0.8% contraction in February.
Economic data is thin on the ground today, so EUR’s correlation to USD could continue to drive the common currency. High-impact US data could trigger volatility in the afternoon.
Canadian Dollar (CAD) Shored Up by Rising Oil Prices
The Canadian Dollar (CAD) initially fell yesterday due to its positive correlation with the US Dollar. However, rising oil prices in the afternoon helped the commodity-linked ‘Loonie’ recover.
Looking ahead, the Bank of Canada’s (BoC) interest rate decision is the focus this afternoon. If the bank maintains its dovish stance, CAD could weaken.
Australian Dollar (AUD) Slips following RBA Comments
The Australian Dollar (AUD) trended higher at first overnight, before trimming its gains after dovish comments from Reserve Bank of Australia (RBA) Deputy Governor Michele Bullock.
New Zealand Dollar (NZD) Struggles as Data Misses Forecasts
The New Zealand Dollar (NZD) moved mostly sideways overnight after the latest retail card spending data came in below expectations.