Euro Tumbles as ECB Slows Pace of Policy Tightening

Euro (EUR) Dives as ECB Delivers Smaller Rate Rise

The Euro (EUR) slumped yesterday as the European Central Bank (ECB) slowed its pace of policy tightening, opting for a smaller 25bps interest rate rise.

Hawkish comments from ECB President Christine Lagarde failed to stem the losses. Lagarde insisted that the bank has ‘more ground to cover’, but EUR plunged nonetheless.

The Euro could face more pressure this morning. Germany’s latest factory orders figures were published earlier, revealing a staggering 10.7% slump in March. Later, another expected decline in Eurozone retail sales could dent EUR.

Pound (GBP) Struggles despite Upbeat PMI

The Pound (GBP) was mixed yesterday, despite a stronger-than-expected UK services PMI providing Sterling with support.

A bearish market mood piled pressure on the increasingly risk-sensitive UK currency, seeing GBP slip against some of its safer rivals.

Looking ahead, a lack of UK economic data today could leave the Pound to trade without a clear trajectory.

US Dollar (USD) Choppy amid Risk Aversion and Post-Fed Weakness

The US Dollar (USD) fluctuated yesterday, managing to recover some of its overnight losses against a handful of weaker peers.

USD was licking its wounds after the Federal Reserve hinted at a pause in its tightening cycle on Wednesday evening. However, a risk-off mood lent support to the safe-haven ‘Greenback’.

Turning to today, the latest non-farm payrolls figure is in focus. A forecast fall in US employment could see the ‘Greenback’ slide.

Canadian Dollar (CAD) Firms on Positive Trade Data

The Canadian Dollar (CAD) wavered higher yesterday as upbeat Canadian trade data lent the ‘Loonie’ some support. However, a slight softening in oil prices capped the crude-linked currency’s upside.

This afternoon Canada’s unemployment rate is expected to tick higher. If so, CAD could face headwinds.

Australian Dollar (AUD) Firms following RBA Statement

The Australian Dollar (AUD) strengthened last night after the Reserve Bank of Australia’s (RBA) monetary policy statement reminded markets of Tuesday’s hawkish surprise from the central bank.

The statement defended the bank’s shock 25bps rate rise earlier this week and reiterated policymakers’ appetite for further hikes.

New Zealand Dollar (NZD) Rises in Tandem with AUD

The New Zealand Dollar (NZD) also moved higher overnight, despite a mixed market mood, as NZD enjoyed its positive correlation to AUD.

Samuel Birnie

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