Pound (GBP) rallies amid market volatility
The pound (GBP) enjoyed support on Friday, with the UK currency benefitting from volatility in the wake of some shockingly strong US jobs data.
Expectations of a more hawkish stance from the Federal Reserve weighed on GBP’s rivals, allowing the pound to press the advantage. A slight decline in Bank of England (BoE) interest rate cut bets also aided GBP.
After a potentially quiet day today, the pound may face turbulence as the week unfolds. Tomorrow’s labour market report and Wednesday’s GDP figure could infuse Sterling with fresh volatility.
Euro (EUR) weakens amid central bank policy divergence
The euro (EUR) came under pressure at the end of last week as the currency’s negative correlation to a surging US dollar (USD) dampened EUR’s appeal.
In addition, the pullback in Fed rate cut bets served to highlight the European Central Bank’s (ECB) relatively dovish approach, after the ECB started unwinding its monetary policy on Thursday.
EUR exchange rates may struggle to recover today, amid the political uncertainty stemming from the European elections.
US dollar (USD) surges following hot jobs data
The US dollar skyrocketed at the end of last week’s session, after the latest US non-farm payrolls report smashed forecasts.
The US economy added 272,000 jobs in May, far above expectations of 185,000. This saw markets further scale back bets on Federal Reserve interest rate cuts this year.
Turning to today, market sentiment could drive the safe-haven US dollar amid a lack of domestic US data releases. Could a downbeat mood support the ‘greenback’?
Canadian dollar (CAD) mixed despite rising unemployment
The Canadian dollar (CAD) was mixed on Friday. While rising Canadian unemployment weighed on CAD, the currency was supported by its positive correlation with USD.
Today, the commodity-linked Canadian dollar could be driven by oil prices. If crude rises, it could boost CAD.
Australian dollar (AUD) firms as risk appetite improves
The Australian dollar (AUD) managed to recoup some of last week’s losses at the start of this week’s session, thanks to a recovering market mood.
New Zealand dollar (NZD) flat in absence of data
The New Zealand dollar (NZD) was rangebound overnight as a lack of data and quiet trading conditions muted the ‘kiwi’.