Pound (GBP) stumbles as UK unveils Spring Budget
The Pound (GBP) struggled to attract support yesterday, with the UK currency wavering lower against its stronger peers, as Chancellor Jeremy Hunt unveiled his Spring Budget.
While the Budget contained measures designed to boost growth, the accompanying forecast from the Office for Budget Responsibility (OBR) said UK inflation would fall below 2% within a few months. This boosted Bank of England (BoE) interest rate cut bets.
Turning to today, UK data is in short supply. Therefore, Sterling may trade without a clear direction.
Euro (EUR) climbs on strong German trade data
The Euro (EUR) rose on Wednesday after surprisingly strong trade figures from Germany raised hopes for the Eurozone’s largest economy.
In addition, EUR benefitted from its strong negative correlation with the US Dollar (USD), as the American currency faced notable selling pressure.
In the spotlight today is the European Central Bank’s (ECB) interest rate decision. The focus is on the bank’s forward guidance. Any dovish hints will likely sink the single currency.
US Dollar (USD) slides as Treasury yields fall
The US Dollar fell sharply yesterday as a decline in US Treasury bond yields and a risk-on mood dragged the ‘Greenback’ lower.
The currency was also pressured by an unexpected decline in US job openings in January, along with confirmation from Federal Reserve Chair Jerome Powell that the central bank would cut interest rates this year.
This afternoon, the latest US jobless claims figure is due out ahead of Powell’s second day of testimony to Congress. If the two events fuel rate cut bets, USD could decline.
Canadian Dollar (CAD) rebounds as BoC pushes back on rate cut bets
After initially falling, hitting multi-month lows against some peers, the Canadian Dollar (CAD) then leapt higher on Wednesday in the wake of the Bank of Canada’s (BoC) policy decision.
While the BoC left rates unchanged, as expected, a pushback against rate cut bets sparked a rally in CAD.
Looking forward, Canada’s latest trade figures could impact CAD exchange rates this afternoon. If exports remained weak in January, the ‘Loonie’ could face pressure.
Australian Dollar (AUD) hits multi-week highs on upbeat trade data
The Australian Dollar (AUD) climbed to multi-week highs last night amid positive trade data from both Australia and China. As China is Australia’s largest trading partner, a leap in Chinese imports from January to February boosted the ‘Aussie’ Dollar.
New Zealand Dollar (NZD) climbs on Chinese trade optimism
The New Zealand Dollar (NZD) also rose overnight as the strong Chinese trade data lifted the ‘Kiwi’.