Pound (GBP) firms on UK-US trade deal hopes
The pound (GBP) rose against its safer rivals yesterday thanks to a risk-on mood and optimism around a UK-US trade deal.
However, GBP’s upside potential was capped by cooler-than-forecast wage growth figures, as they increased bets on an interest rate cut from the Bank of England (BoE) in May.
Today the pound is resisting losses despite cooler-than-forecast inflation figures for March further fuelling BoE rate cut bets.
Euro (EUR) falls following dire German data
The euro (EUR) was placed on the defensive yesterday after an abysmal reading from Germany’s latest economic sentiment index.
Economic morale plummeted from 51.6 in March to -14 in April, far below forecasts of 9.5, as anxiety around global trade tensions rocked confidence among manufacturers in the Eurozone’s largest economy.
The Eurozone’s final inflation rate reading for March is due out later today. Confirmation of a cooldown could dent EUR ahead of the European Central Bank’s (ECB) interest rate decision.
US dollar (USD) mixed as Trump hints at softer tariff stance
The US dollar (USD) was mixed on Tuesday, with the safe-haven currency falling against its riskier rivals but managing to edge higher elsewhere.
USD seemed to draw support from Donald Trump’s slightly softer approach to tariffs, along with news that more companies were increasing investment in US-based production in order to avoid tariffs.
Turning to today, the ‘greenback’ could enjoy more success as US retail sales are expected to have jumped higher in March.
Canadian dollar (CAD) slips as inflation eases
The Canadian dollar (CAD) stumbled yesterday as Canadian inflation unexpectedly cooled in March, stoking bets on the possibility of more Bank of Canada (BoC) rate cuts in the future.
Looking forward, the BoC’s interest rate decision is in focus. Although no change is expected, yesterday’s inflation figures could see policymakers strike a more dovish tone, which may dent CAD.
Australian dollar (AUD) slips amid anxious mood
The Australian dollar (AUD) softened slightly overnight as a risk-off mood put some pressure on the ‘Aussie’.
New Zealand dollar (NZD) flat as markets turn cautious
The New Zealand dollar (NZD) traded mostly sideways last night, with the risk-sensitive ‘kiwi’ avoiding losses despite the gloomy mood.
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