Pound (GBP) directionless after mixed PMI data
The pound (GBP) moved in a broad range yesterday as investors reacted to a mixed set of UK PMI figures.
March’s final services PMI indicated activity slowed to its weakest level in nearly a year. At the same time, persistent price pressures strengthened expectations that the Bank of England (BoE) may still pursue interest rate increases later this year.
With no notable UK data due today, the pound is likely to be guided by overall market sentiment. So far, Sterling has advanced against safer currencies but lost ground versus more risk-sensitive peers.
Euro (EUR) lifted by hawkish ECB outlook
The euro (EUR) climbed against weaker counterparts yesterday, as markets largely overlooked sluggish private-sector activity and instead focused on inflation dynamics.
Final PMI data for March showed input costs rising at their fastest rate in over three years, reinforcing expectations that the European Central Bank (ECB) could deliver multiple early rate hikes.
Looking ahead, softer-than-expected German factory orders for February and a projected decline in Eurozone retail sales may weigh on the single currency today.
US dollar (USD) drops on ceasefire optimism
The US dollar (USD) weakened yesterday, with the safe-haven currency failing to gain traction despite a cautious market backdrop earlier in the session.
Ongoing concerns surrounding US President Donald Trump’s threats towards Iranian infrastructure kept investors wary, while a sharp fall in US durable goods orders for February added further downside pressure.
Overnight developments saw the US and Iran agree to a two-week ceasefire, alongside plans for Tehran to reopen the Strait of Hormuz. This triggered a rally in risk appetite, sending the US dollar lower. If this positive tone persists, USD may remain under pressure today.
Canadian dollar (CAD) unsettled as oil prices slide
The oil-linked Canadian dollar (CAD) experienced volatile trading yesterday amid swings in crude prices. Ultimately, the currency trended lower, with a softer US dollar and weaker Ivey PMI data adding to the downside.
Today, CAD is under significant pressure after oil prices tumbled by around 15% following news of the Middle East ceasefire. The ‘loonie’ may continue to struggle as the session progresses.
Australian dollar (AUD) surges on improved risk appetite
The Australian dollar (AUD) rallied strongly overnight, supported by a sharp improvement in market sentiment following easing geopolitical tensions in the Middle East.
New Zealand dollar (NZD) advances amid upbeat sentiment
The New Zealand dollar (NZD) also posted solid gains during the Asian session, buoyed by the improved risk environment and a hawkish tone from the Reserve Bank of New Zealand (RBNZ) after its latest policy meeting.
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