US Dollar (USD) Rebounds after Inflation Edges Higher
The US Dollar (USD) weakened at the start of Friday’s European session as a recovering risk appetite drained demand for the safe-haven ‘Greenback’.
USD then managed to bounce back during the second half of the session after the US core PCE price index – the Federal Reserve’s favoured measure of inflation – unexpectedly edged higher. Markets bet on a more hawkish approach from the Fed, thereby boosting the ‘Greenback’.
Later this afternoon, May’s American consumer confidence report will be published. Could a drop in consumer morale dent USD exchange rates?
Pound (GBP) Ticks Higher after Positive Retail Data
The Pound (GBP) initially enjoyed support on Friday as an upbeat market mood and stronger-than-forecast UK retail sales lifted Sterling.
However, sentiment soured in the afternoon, trimming the Pound’s gains against its safer peers.
Turning to today, GBP could face muted movement amid a lull in UK economic data.
Euro (EUR) Dips following ECB Remarks
The Euro (EUR) stumbled at the end of last week following comments from European Central Bank (ECB) Chief Economist Philip Lane.
Lane said that he expects food inflation to cool and the recent drops in energy prices to eventually feed through into core inflation. These comments dampened ECB rate hike bets, thereby pressuring the common currency.
Looking ahead, the Eurozone’s latest economic sentiment index is due to drop this morning. If it prints as forecast, EUR could slip.
Canadian Dollar (CAD) Shored Up by Oil Prices
The Canadian Dollar (CAD) started Friday’s session on the back foot, due to its positive trading relationship with USD. However, rising crude prices helped the oil-linked ‘Loonie’ recoup some losses.
Today, oil prices could continue to drive the Canadian Dollar. With crude ticking lower, CAD could face headwinds.
Australian Dollar (AUD) Slips amid Risk-Off Mood
The Australian Dollar (AUD) weakened overnight as a cautious market mood dented the risk-sensitive ‘Aussie’.
New Zealand Dollar (NZD) Declines during Cautious Trade
Likewise, the New Zealand Dollar (NZD) was subdued during last night’s session due to the risk-off sentiment among investors.