US Dollar Dips as Banking Fears Dent Fed Bets

US Dollar (USD) Slides as Markets Scale Back Fed Bets

A risk-off market mood failed to lift the safe-haven US Dollar (USD) yesterday, as markets scaled back their expectations for further Federal Reserve rate hikes amid renewed turmoil in the US banking sector.

In the afternoon, upbeat US data helped stem the USD selloff. Durable goods orders recovered by an impressive 3.2%, beating forecasts of 0.7%.

The US GDP growth rate for the first quarter of 2023 is in the spotlight today. Economists expect US growth to have slowed, although they still forecast a strong expansion of 2%. Could the GDP data come in lower than expected, thereby denting USD?

Pound (GBP) Underpinned by BoE Rate Rise Bets

The Pound (GBP) gained ground yesterday, initially rising without a clear catalyst for the movement.

Later in the session, stronger-than-expected sales data from the Confederation of British Industry (CBI) furthered Sterling’s upside. Ongoing Bank of England (BoE) interest rate rise bets also supported the UK currency.

Turning to today’s session, a lack of British economic data may leave GBP without a clear directional bias.

Euro (EUR) Strengthens amid ECB Comments

Upbeat German data gave the Euro (EUR) an early boost yesterday morning. Consumer confidence in the Eurozone’s largest economy rose more than forecast to hit a 13-month high.

Furthermore, comments from two European Central Bank (ECB) rate setters also cheered EUR investors. Policymaker Boris Vujčić advocated further policy tightening, while ECB Vice President Luis de Guindos said that the Eurozone is likely to sidestep a recession this year.

Later this morning, the Euro could catch a tailwind. Economists expect Eurozone economic sentiment to rise to a ten-month high in April, which may boost the common currency.

Canadian Dollar (CAD) Falls amid Crude Price Decline

The Canadian Dollar (CAD) weakened yesterday as a drop in oil prices dragged the crude-linked currency lower.

Looking forward, could forecast declines in Canadian business optimism and wage growth see CAD suffer further losses?

Australian Dollar (AUD) Inches Higher as Market Mood Improves

The Australian Dollar (AUD) eked out modest gains overnight, with an upbeat market mood supporting the risk-sensitive ‘Aussie’.

New Zealand Dollar (NZD) Firms as Risk Appetite Recovers

The New Zealand Dollar (NZD) also ticked higher last night, despite a shock drop in business confidence, amid the risk-on impulse.

Samuel Birnie

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