Pound (GBP) softens amid souring market mood
A lack of UK data left the pound (GBP) exposed to global risk dynamics yesterday, with the increasingly risk-sensitive currency falling against its stronger peers.
However, the recent shift in Bank of England (BoE) interest rate cut expectations put a floor under GBP. The chance of a rate cut in June is now vanishingly small.
Looking ahead, UK economic data remains thin on the ground for today’s session. As a result, Sterling may trade without a clear trajectory.
Euro (EUR) capped by stronger USD
The euro’s (EUR) strong negative correlation with the US dollar (USD) stifled EUR’s upside potential yesterday, as investors favoured USD.
Nevertheless, an acceleration in German inflation in May and stronger German consumer confidence results both helped the single currency firm against its weaker rivals.
Positive Eurozone data could lift EUR today. Analysts expect unemployment in the bloc to have held at a record low in April and economic sentiment to have improved in May.
US dollar (USD) climbs as markets trim Fed bets
The US dollar rallied yesterday, with the ‘greenback’ being boosted by a sharp rise in US Treasury yields.
The movement came as markets adjusted Federal Reserve interest rate expectations following upbeat US consumer confidence data and hawkish comments from a Fed official yesterday.
Turning to today, the latest estimate for US GDP growth in the first quarter could dent the ‘greenback’ this afternoon, if it confirms a sharp slowdown. An uptick in jobless claims could also weigh on USD.
Canadian dollar (CAD) mixed as oil falls and USD rises
The crude-linked Canadian dollar (CAD) fluctuated without a clear direction yesterday. While falling oil prices pressured the ‘loonie’, CAD’s positive correlation with USD offset the downside against some of its peers.
With market-moving Canadian data in short supply today, and the country’s latest GDP figures out tomorrow, movement in CAD may be limited.
Australian dollar (AUD) slides in risk-off trade
The risk-sensitive Australian dollar (AUD) fell last night as a souring market mood weighed heavily on the ‘Aussie’.
New Zealand dollar (NZD) declines amid gloomy mood
The New Zealand dollar (NZD) also weakened during overnight trade as the risk-off market sapped the currency’s appeal.