US Dollar Claws Its Way Higher amid Risk-Off Mood

US Dollar (USD) Rallies as Sentiment Sours

The US Dollar (USD) climbed yesterday as investors flocked to the safe-haven currency amid a risk-off market mood.

Investors were jittery amid a congressional stand-off over whether to raise the US debt ceiling, with the clock ticking down to a ‘catastrophic’ debt default. This, counterintuitively, lent the safe US Dollar support.

Today, all eyes are on the latest American consumer price index. Signs of persistent inflationary pressures could support USD, while another cooldown would likely dent the ‘Greenback’.

Pound (GBP) Edges Higher Ahead of BoE Decision

The Pound (GBP) firmed yesterday as markets continued to bet on the UK currency ahead of the Bank of England (BoE) interest rate decision tomorrow.

Investors are pricing in a 25bps rate hike, with some analysts expecting the BoE to deliver two additional rate rises through the summer. These expectations lifted GBP exchange rates.

Today, UK data is thin on the ground. The Pound may face limited movement, while BoE bets could put a floor under GBP.

Euro (EUR) Muted amid USD Strength

The Euro (EUR) was subdued yesterday as the common currency suffered from its negative correlation to a stronger US Dollar.

Lingering headwinds following the European Central Bank’s (ECB) rate decision last week also weighed on EUR. However, a gloomy market mood prevented the safer Euro from falling against its riskier peers.

Looking to today’s session, Eurozone data is in short supply through the rest of the day’s trade. This could mute EUR movement.

Canadian Dollar (CAD) Muted as Oil Weakens

The Canadian Dollar (CAD) traded mostly sideways yesterday. A downturn in oil prices weighed on the commodity-linked ‘Loonie’, while the currency’s positive correlation with USD offset the downside.

Oil prices are continuing to tick lower today. Could this drag CAD down as the session unfolds?

Australian Dollar (AUD) Rangebound amid Lack of Data

The Australian Dollar (AUD) was flat during overnight trade as a lack of economic data confined the ‘Aussie’ to a narrow range.

New Zealand Dollar (NZD) Wavers in Thin Trading Conditions

The New Zealand Dollar (NZD) also traded without a clear direction last night, trading sideways in the absence of any notable fundamental drivers.

Samuel Birnie

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