Pound (GBP) fluctuates in choppy trade
The Pound (GBP) wobbled on Tuesday as an ongoing lack of UK economic data left the currency vulnerable to market volatility.
Sterling also struggled to find a clear direction as investors looked ahead to today’s consumer price index and tomorrow’s Bank of England (BoE) decision.
The CPI figures this morning came in lower than forecast, with both headline and core inflation cooling more than expected last month, putting the Pound on the back foot.
Euro (EUR) weakens amid ECB rate cut bets
The Euro (EUR) wavered lower against many rivals yesterday as Germany’s latest economic sentiment index fuelled speculation around European Central Bank (ECB) interest rate cuts.
Although the index improved significantly, this was driven by investor expectations that the ECB will soon start unwinding its policy tightening. Ultimately, the data put pressure on the common currency.
Turning to today, a speech from ECB President Christine Lagarde could move the dial on EUR. If she sounds like she’s paving the way for rate cuts, the Euro could falter.
US Dollar (USD) trims gains as mood improves
The US Dollar (USD) initially strengthened yesterday, climbing to a two-week high, before relinquishing its gains.
The reversal in direction came as the market mood improved and US Treasury yields edged lower.
Looking ahead, the spotlight is on this evening’s interest rate decision from the Federal Reserve. Any indication whether the Fed is open to a rate cut in June could send the US Dollar sharply higher or lower.
Canadian Dollar (CAD) volatile amid cooling inflation
The Canadian Dollar (CAD) slumped on Tuesday after Canada’s latest CPI showed an unexpected deceleration in inflation, thereby boosting bets on a Bank of Canada (BoC) rate cut. However, the crude-linked ‘Loonie’ managed to bounce back amid rising oil prices.
This evening, the BoC’s latest meeting minutes are due to be published. A dovish tone from policymakers could dent CAD.
Australian Dollar (AUD) rangebound amid quiet trade
The Australian Dollar (AUD) wavered sideways overnight as markets brace for tonight’s Fed interest rate decision.
New Zealand Dollar (NZD) weakens as commodities prices fall
The New Zealand Dollar (NZD) edged lower during last night’s trade as weaker commodities prices weighed on the resource-linked ‘Kiwi’.