Pound (GBP) unsettled after labour market update
The pound (GBP) experienced a volatile session yesterday in response to a mixed UK jobs report. While the unemployment rate unexpectedly fell, underlying indicators still pointed to softness in the labour market.
Political uncertainty also contributed to the uneven movement, with controversy surrounding Peter Mandelson’s appointment as US ambassador continuing to dominate headlines.
So far today, Sterling has shown little reaction to the UK’s latest consumer price index. The data has done little to shift Bank of England (BoE) interest rate expectations. Headline inflation climbed from 3% to 3.3% in March, in line with forecasts, while core inflation eased slightly from 3.2% to 3.1%.
Euro (EUR) pressured by weak German sentiment
The euro (EUR) moved lower yesterday, undermined by disappointing economic data out of Germany.
Germany’s ZEW economic sentiment index dropped sharply to -17.2 in April – its weakest level since December 2022 and significantly below expectations for a more modest fall to -5.
Looking to the session ahead, the Eurozone’s consumer confidence reading for April is due this afternoon. A further decline in sentiment could weigh on demand for the single currency.
US dollar (USD) lifted by geopolitical unease
The US dollar (USD) edged higher overall yesterday, supported by lingering uncertainty surrounding the US-Iran ceasefire and forthcoming peace negotiations. This backdrop maintained demand for the safe-haven currency.
At the same time, a modest improvement in market sentiment led to some volatility in the ‘greenback’. However, robust US retail sales figures for March helped underpin the currency.
With limited US data on today’s calendar, USD may take its cues from broader market sentiment. Continued geopolitical tensions could keep the currency on uneven footing.
Canadian dollar (CAD) buoyed by oil uptick
The Canadian dollar (CAD), which is closely tied to oil prices, strengthened against weaker peers yesterday as crude prices ticked higher.
In the absence of domestic data, movements in the oil market are likely to remain the primary driver for CAD today, particularly as developments in the Middle East continue to influence price volatility.
Australian dollar (AUD) gains on easing tensions
The risk-sensitive Australian dollar (AUD) inched higher overnight after reports that US President Donald Trump would extend the US-Iran ceasefire unilaterally offered markets a degree of reassurance.
New Zealand dollar (NZD) supported by risk appetite
The New Zealand dollar (NZD) also firmed overnight, benefiting from an improvement in overall market sentiment and a more risk-positive trading environment.
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