Pound (GBP) undermined by BoE Bailey comments
The pound (GBP) initially trended higher on Wednesday, as stronger-than-expected UK inflation figures caused investors to trim their Bank of England (BoE) interest rate cut bets.
However, subsequent comments from BoE Governor Andrew Bailey then pulled the rug out from beneath Sterling as he suggested inflation will see a ‘strong drop’ in April.
Looking ahead, in the absence of any notable UK data today, the pound may struggle to find direction.
Euro (EUR) tempered by inflation print
The euro (EUR) was undermined by the release of the Eurozone’s own CPI data during yesterday’s session as March’s finalised figures confirmed inflation in the bloc cooled to a 28-month low.
However, the single currency’s negative correlation with the US dollar (USD) proved to be enough to limit the euro’s losses.
Coming up, a speech by European Central Bank (ECB) Vice-President Luis de Guindos could weigh on EUR exchange rates this morning if he appears supportive of a June rate cut.
US dollar (USD) dented by risk-on flows
The US dollar faced resistance yesterday as a broadly risk-positive market mood sapped demand for the safe-haven currency.
Further undermining the ‘greenback’ was a modest pullback in US Treasury yields.
The release of last week’s US initial jobless claims may keep the pressure on the US dollar this afternoon as economists forecast new unemployment claims will have ticked higher.
Canadian dollar (CAD) dented by sliding oil prices
The Canadian dollar (CAD) ticked lower on Wednesday as the commodity-sensitive currency was undermined by a slump in oil prices.
With domestic data thin on the ground today, any movement in the ‘loonie’ is likely to remain linked to oil-price dynamics. Will another drop in crude trigger further losses for CAD?
Australian dollar (AUD) buoyed by better-than-expected jobs report
The Australian dollar (AUD) firmed overnight on Wednesday, after Australia’s latest labour figures reported a smaller-than-expected rise in unemployment last month.
New Zealand dollar (NZD) firms in risk-on trade
The New Zealand dollar (NZD) also ticked higher in overnight trade, with the ‘Kiwi’ drawing support from risk-on flows and an uptick in commodity prices.