Pound (GBP) Turbulent amid Mixed BoE Bets
The Pound (GBP) fluctuated yesterday as markets responded to mixed Bank of England (BoE) predictions.
A Reuters poll of economists saw a narrow majority expecting another interest rate rise next month. Meanwhile, most economists polled by Bloomberg expect the BoE to leave rates unchanged. This uncertainty saw Sterling waver.
Trade in the Pound is mixed so far this morning, following the UK’s latest jobs report. While unemployment unexpectedly rose in February, this was offset by surprisingly resilient wage growth.
Euro (EUR) Slips as USD Rallies
The Euro (EUR) suffered from its negative correlation with the US Dollar (USD) yesterday, as the latter currency gained ground.
A souring mood around the Russia-Ukraine crisis added to EUR’s woes. Relations between Russia and the West worsened after a key Kremlin critic was sentenced to 25 years in prison. Fears that the Black Sea grain deal would collapse also hurt the Euro.
Later this morning, the Euro could climb. Economists expect Germany’s latest ZEW economic sentiment index to improve.
US Dollar (USD) Rises amid Fed Hike Bets
The US Dollar was boosted by Federal Reserve interest rate bets yesterday.
Markets continued to price in a 25bps hike following hawkish comments at the end of last week’s trade. A shock jump in US inflation expectations also fuelled rate hike bets.
Amid a lack of economic data today, risk appetite could drive the safe-haven US Dollar. This evening, Fed policymaker Michelle Bowman is due to speak. As a known hawk, Bowman could boost the Dollar if she advocates more rate rises.
Canadian Dollar (CAD) Pressured by Falling Oil Prices
The Canadian Dollar (CAD) came under some pressure yesterday as a drop in oil prices weighed on the commodity-linked ‘Loonie’. However, CAD’s positive correlation with a stronger US Dollar helped the currency rise against its weaker peers.
Turning to today, a forecast decline in Canadian inflation could see CAD exchange rates stumble.
Australian Dollar (AUD) Buoyed by RBA Minutes
The Australian Dollar (AUD) ticked higher overnight on Monday, as the minutes from the Reserve Bank of Australia’s (RBA) April policy meeting revealed policymakers remain open to another rate hike in the future.
New Zealand Dollar (NZD) Buoyed by Positive Chinese GDP
The New Zealand Dollar (NZD) also firmed in overnight trade as a stronger-than-forecast Chinese GDP reading helped to bolster the risk-sensitive ‘Kiwi’.