Pound (GBP) subdued as UK economy stalls
The UK’s latest GDP figures had little impact on the pound (GBP) yesterday, after they revealed that the UK economy stalled as expected in April.
This left Sterling vulnerable to market volatility, with the UK currency trading in a wide range against its peers.
Today, British economic data is thin on the ground. This could once again see GBP exchange rates move without a clear trajectory.
Euro (EUR) supported by weak USD
The euro (EUR) rose against its weaker peers yesterday thanks to its negative correlation with a tumbling US dollar (USD).
However, the safer euro fell against its riskier rivals in the afternoon due to a sudden improvement in the market mood.
This morning, the Eurozone’s latest industrial production data could impact EUR. Will a slowdown in output put pressure on the euro?
US dollar (USD) slumps following softer inflation
The US dollar plunged yesterday afternoon after the latest US consumer price index came in softer than forecast, with headline inflation unexpectedly easing from 3.4% to 3.3% in May.
The Federal Reserve decision in the evening helped the ‘greenback’ claw back some of its losses, as the Fed indicated it will only cut interest rates once this year. However, USD remained down on the day.
Looking ahead, US producer price inflation for May and last week’s initial jobless claims could drive USD today. If PPI cooled and jobless claims ticked higher, the ‘greenback’ could weaken.
Canadian dollar (CAD) undermined by USD correlation
The Canadian dollar (CAD) was dragged down by its positive correlation with USD yesterday, while a drop in oil prices also dented the crude-linked ‘loonie’.
Turning to today, a speech from Bank of Canada (BoC) Deputy Governor Sharon Kozicki could impact CAD. If Kozicki strikes a dovish tone, the ‘loonie’ may weaken.
Australian dollar (AUD) softens despite falling unemployment
After rocketing higher yesterday following the US CPI, the Australian dollar (AUD) trimmed its gains overnight. Even a decline in Australian unemployment wasn’t enough to keep the ‘Aussie’ afloat.
New Zealand dollar (NZD) stumbles as market mood sours
Likewise, the New Zealand dollar (NZD) surrendered yesterday’s gains overnight as a souring market mood dampened the risk-sensitive ‘kiwi’.