Pound (GBP) subdued amid sparse data
The pound (GBP) traded with little conviction yesterday, though it did manage to tick higher against some weaker counterparts in the absence of fresh UK data.
Sterling may have received mild support after the OECD upgraded its UK inflation projection from 2.5% to 4%, strengthening expectations that the Bank of England (BoE) could still deliver interest rate hikes this year.
Looking to today’s session, GBP may struggle to gain traction following the UK’s latest retail sales release. While sales fell by 0.4% in February, the drop was not as severe as the 0.7% decline anticipated by economists.
Euro (EUR) pressured by German sentiment slump
The euro (EUR) weakened against stronger currencies yesterday, with the single currency weighed down by a deterioration in German consumer confidence.
That said, losses were limited after European Central Bank (ECB) policymaker Joachim Nagel struck a hawkish tone, suggesting that an interest rate increase could come as early as April.
With little in the way of impactful Eurozone data due today, EUR may lack clear direction in the near term.
US dollar (USD) supported by cautious market mood
The US dollar (USD) strengthened yesterday as a more risk-averse market environment drove demand for safe-haven assets.
The ‘greenback’ also appeared to benefit from the OECD’s projection that US inflation could reach 4.2% this year, potentially discouraging the Federal Reserve from moving ahead with rate cuts.
Later today, a predicted dip in US consumer sentiment could place some pressure on USD. However, ongoing market caution may help underpin the currency.
Canadian dollar (CAD) weighed down by softer inflation outlook
The Canadian dollar (CAD) failed to capitalise on rising oil prices yesterday, as expectations of relatively steady inflation in Canada this year may prompt the Bank of Canada (BoC) to adopt a less hawkish stance than other central banks.
Oil price dynamics are likely to remain a key influence on CAD today. Should fading hopes for peace drive crude prices higher, the ‘loonie’ could find some support.
Australian dollar (AUD) rebounds from multi-month lows
The Australian dollar (AUD) recovered from fresh multi-month lows overnight, finding some relief after US President Donald Trump postponed planned strikes on Iranian energy facilities by ten days and suggested that negotiations were progressing positively.
New Zealand dollar (NZD) pressured before partial recovery
The New Zealand dollar (NZD) also slid to new multi-month lows during the overnight session, pressured by both a risk-off backdrop and a sharp decline in domestic consumer confidence, before staging a modest rebound.
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