Pound (GBP) directionless amid lack of data
The pound (GBP) continued to move without a clear trajectory yesterday as British economic data remained thin on the ground.
Comments from Chancellor Rachel Reeves failed to move the needle on GBP, as she delivered the Mais lecture. Although she tried to strike an optimistic tone, the UK economy has its challenges ahead.
Sterling may remain muted today amid an ongoing lack of UK data and hesitancy ahead of tomorrow’s interest rate decision from the Bank of England (BoE).
Euro (EUR) resilient despite dire German data
The euro (EUR) also traded in a wide range yesterday, although the single currency managed to shrug off some abysmal German data thanks to its negative correlation with a falling US dollar (USD).
Germany’s latest ZEW economic sentiment index collapsed from 58.3 to -0.5 in March – its third-steepest drop on record – amid the crisis in the Middle East.
Today, the Eurozone’s final consumer price index for February is scheduled for release, although it may not have much impact on EUR unless it deviates from the previous estimate.
US dollar (USD) retreats as risk appetite improves
The safe-haven US dollar softened yesterday as an improving market mood dampened USD demand.
In addition, the ‘greenback’ faced pressure as markets reassessed Federal Reserve policy expectations, with analysts pushing back on recent speculation that the Fed could hike rates this year.
Looking ahead, US produce price inflation and factory orders could impact the US dollar today. However, movement may be limited ahead of the Fed policy announcement this evening, which could trigger USD volatility.
Canadian dollar (CAD) pulls back alongside USD and oil
The Canadian dollar (CAD) moved in tandem with the US dollar yesterday, due to CAD’s positive correlation with USD, while a decline in oil prices also influenced the crude-linked ‘loonie’.
The Bank of Canada (BoC) will announce its latest interest rate decision later today. No policy changes are expected, but any signals that the bank expects rising energy prices to push up inflation could support CAD.
Australian dollar (AUD) edges higher amid cautious optimism
The Australian dollar (AUD) inched higher in overnight trade amid a cautiously upbeat market mood.
New Zealand dollar (NZD) steady as risk appetite improves
The New Zealand dollar (NZD) also found itself underpinned by a modest uptick in risk appetite overnight.
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