Pound (GBP) mixed amid stronger PMI
The pound (GBP) lacked a clear direction yesterday, with competing drivers leaving Sterling to trade across a wide range.
A modest upward revision to the UK’s final services PMI for April offered GBP some support. However, political uncertainty ahead of the closely watched local elections kept pressure on the pound.
Today’s elections will likely be the main focus for GBP investors. Should concerns over UK political instability push government bond yields higher, Sterling could face fresh headwinds.
Euro (EUR) lifted by weaker USD
The euro (EUR) strengthened against its weaker rivals yesterday, benefiting from its strong inverse relationship with the sliding US dollar (USD).
However, the safer single currency struggled against riskier peers amid a broadly upbeat market mood. Meanwhile, a contraction in Eurozone private sector activity also limited EUR’s upside potential.
The euro may struggle for direction today, with the latest Eurozone data expected to deliver a mixed picture. However, any hawkish remarks from European Central Bank (ECB) policymakers could lend EUR support, as four ECB officials are scheduled to speak.
US dollar (USD) tumbles on Middle East optimism
The safe-haven US dollar fell sharply yesterday after President Donald Trump praised ‘great progress’ towards a ‘final agreement’ with Iran, fuelling a surge in market risk appetite.
The ‘greenback’ recovered from its lowest levels in the afternoon, supported by dip-buying and stronger-than-forecast US jobs data. However, USD still closed the session lower overall.
A predicted rise in last week’s jobless claims could weigh on the US dollar later today. In the meantime, risk appetite is likely to remain a key driver. If sentiment stays upbeat, the ‘greenback’ may remain under pressure.
Canadian dollar (CAD) slumps as oil prices slide
The crude-sensitive Canadian dollar (CAD) came under heavy selling pressure yesterday, as hopes of a diplomatic breakthrough in the US-Iran conflict sent oil prices sharply lower.
With Canadian economic data in short supply today, CAD movement may continue to be shaped by crude prices. If optimism around peace talks keeps weighing on oil, the ‘loonie’ could weaken further.
Australian dollar (AUD) strengthens as risk appetite holds
The Australian dollar (AUD) ticked higher overnight, as hopes for a US-Iran peace deal continued to support market sentiment, helping AUD overlook weaker-than-expected trade data.
New Zealand dollar (NZD) underpinned by upbeat trade
The New Zealand dollar (NZD) remained close to recent highs overnight, as the risk-positive market mood continued to support NZD.
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