Pound (GBP) firms as bond yields ease
The increasingly risk-sensitive pound (GBP) enjoyed an upbeat market mood yesterday, with the British currency firming against its safer rivals.
Easing UK government borrowing costs also supported GBP, as bond yields retreated from Monday’s two-week highs.
With UK economic data in short supply today, bond market movements and wider market trends may continue to influence Sterling. If gilt yields continue to fall, the pound may attract bids.
Euro (EUR) gains limited despite upbeat German data
The euro (EUR) edged higher against its weaker peers yesterday, thanks to positive German economic data and EUR’s strong negative correlation with a weaker US dollar (USD).
However, the safer single currency found its gains limited amid the risk-on shift in markets.
Today, the common currency could be muted as data dries up and EUR investors brace for the European Central Bank (ECB) interest rate decision on Thursday.
US dollar (USD) slides as market sentiment improves
The safe-haven US dollar weakened yesterday as risk appetite continued to rebound amid events in the Middle East.
With Iran and Israel agreeing to refrain from further attacks following Monday’s flare-up of violence, and US President Donald Trump claiming a peace deal is close, cautious optimism took hold in markets.
Looking ahead, USD investors are likely to focus on the latest US consumer price index today. A jump in inflation in May could help USD find its footing, if it’s seen as increasing the likelihood of an interest rate hike from the Federal Reserve.
Canadian dollar (CAD) slips as oil prices retreat
The crude-linked Canadian dollar (CAD) fell on Tuesday, with softening oil prices dragging on the currency.
The focus shifts to the Bank of Canada’s (BoC) interest rate decision today. While the bank isn’t expected to adjust its monetary policy, CAD could climb if the BoC signals that rates may need to rise in the coming months.
Australian dollar (AUD) softens amid fresh US-Iran tensions
The Australian dollar (AUD) trended lower overnight as the US launched fresh strikes against Iran after a US military helicopter was downed near the Strait of Hormuz.
New Zealand dollar (NZD) muted as mood sours
The New Zealand dollar (NZD) remained subdued during last night’s session as geopolitical concerns dampened market risk appetite.
Never miss a movement. Create a free account with Currencies Direct to get the latest currency news delivered straight to your inbox. You can also set up rate alerts and check live rates 24/7.
