Pound (GBP) weakens despite BoE’s hawkish tone
The pound (GBP) softened on Monday, with Sterling being pressured by a strengthening of most of its major peers.
This was despite remarks from Bank of England (BoE) Deputy Governor Clare Lombardelli, who indicated that the case for cautious rate cuts remains strong.
Turning to today’s session, the UK labour market report is in focus. A rise in unemployment coupled with slowing wage growth in March, looks to drag on the pound this morning.
Euro (EUR) subdued by improved market mood
The euro (EUR) struggled to gain traction yesterday, with the single currency falling out of favour as investors largely shunned safer assets.
EUR losses were magnified by its strong negative correlation with the surging US dollar (USD), which was the standout performer of the session.
Looking ahead, the euro could recover some ground if Germany’s ZEW economic sentiment survey shows morale improved this month.
US dollar (USD) rallies on trade truce optimism
The US dollar surged at the start of the week following news of a breakthrough in trade negotiations between the US and China, with both sides agreeing to reduce tariffs by 115% over the next 90 days.
Markets welcomed the development, hopeful that easing tensions will lower recession risks in the US.
Attention now turns to the US CPI release. If inflation rose in April, it may reinforce the Fed’s hawkish outlook and provide fresh tailwinds for the US dollar.
Canadian dollar (CAD) gains as oil prices climb
The Canadian dollar (CAD) firmed on Monday, finding support from a notable uptick in crude oil prices, which helped to cushion concerns over the fallout from US trade policy.
With no key Canadian data due today, the ‘loonie’ will likely continue to track oil price trends, with further gains possible if the commodity extends its rally.
Australian dollar (AUD) lifted by confidence rebound
The Australian dollar (AUD) rallied in overnight trade, bolstered by a recovery in domestic consumer sentiment and broader market risk appetite.
New Zealand dollar (NZD) rises on upbeat sentiment
The New Zealand dollar (NZD) also advanced overnight, benefiting from the improved global outlook and strengthening demand for risk-sensitive assets.
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