Pound (GBP) rudderless as UK data remains scarce
The pound (GBP) remained without firm direction yesterday, with a lack of fresh UK economic releases leaving Sterling adrift.
Remarks from Chancellor Rachel Reeves did little to influence GBP during her Mais lecture. While she aimed to sound upbeat, the broader backdrop still points to significant challenges for the UK economy.
Sterling could stay subdued today as the domestic data calendar remains sparse and investors hold back ahead of tomorrow’s Bank of England (BoE) interest rate decision.
Euro (EUR) firm even as German figures disappoint
The euro (EUR) also traded in a mixed range yesterday, but the single currency proved relatively resilient despite some dreadful German data, helped by its inverse relationship with a weaker US dollar (USD).
Germany’s latest ZEW economic sentiment index plunged from 58.3 to -0.5 in March, marking its third-largest fall on record, as the Middle East crisis rattled confidence.
Attention now turns to the Eurozone’s final consumer price index for February. However, the release may only influence EUR if it differs from the preliminary reading.
US dollar (USD) weakens as market sentiment brightens
The safe-haven US dollar lost ground yesterday as an improvement in investor sentiment reduced demand for USD.
At the same time, the ‘greenback’ came under added pressure as markets revisited Federal Reserve policy expectations, with analysts challenging recent bets that the Fed might raise interest rates this year.
US producer price inflation and factory orders may shape movement in the US dollar later today. That said, trading could stay restrained before this evening’s Fed policy announcement, which may prompt fresh USD volatility.
Canadian dollar (CAD) slips in line with USD and oil prices
The Canadian dollar (CAD) retreated alongside the US dollar yesterday, reflecting CAD’s positive correlation with USD, while falling oil prices also weighed on the commodity-linked ‘loonie’.
The Bank of Canada (BoC) is due to deliver its latest interest rate decision later today. No change in policy is expected, but any indication that higher energy prices could lift inflation may offer support to CAD.
Australian dollar (AUD) ticks up on guarded optimism
The Australian dollar (AUD) posted modest gains in overnight trading as markets adopted a cautiously optimistic tone.
New Zealand dollar (NZD) stable as risk appetite improves
The New Zealand dollar (NZD) was also supported overnight by a slight improvement in market risk appetite.
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