Pound (GBP) mixed despite upbeat PMI
The pound (GBP) traded without a clear trajectory yesterday, as mixed factors saw Sterling trade in a wide range.
Although a slight upward revision to the UK’s final services PMI for April supported the pound, political uncertainty ahead of the closely watched local elections pressured GBP.
Today’s elections are undoubtedly the key focus for GBP investors. If worries about political uncertainty in the UK see government bond yields tick higher, this may reflect poorly on the pound.
Euro (EUR) buoyed by USD decline
The euro (EUR) rose against its weaker peers yesterday, as EUR benefited from its strong negative correlation with the tumbling US dollar (USD).
However, the safer euro struggled against risk-sensitive currencies amid an upbeat market mood, while a contraction in Eurozone private sector activity also stifled the euro’s potential.
The single currency may lack a clear direction today, as forecasters expect the latest Eurozone economic data to paint a mixed picture. Any hawkish comments from European Central Bank (ECB) policymakers could underpin the euro, with four officials due to speak today.
US dollar (USD) plummets amid Middle East optimism
The safe-haven US dollar slumped yesterday after President Donald Trump hailed ‘great progress’ on reaching a ‘final agreement’ with Iran, as these comments saw a surge in market risk appetite.
The ‘greenback’ managed to bounce off its worst levels in the evening thanks to dip-buying and better-than-expected US jobs data, although the currency remained lower overall.
A forecast rise in jobless claims last week could dent USD later today. Meanwhile, market risk appetite will likely remain a key driver. If the mood stays upbeat, the ‘greenback’ could remain on the defensive.
Canadian dollar (CAD) crumbles as oil prices plunge
The crude-linked Canadian dollar (CAD) faced broad selling pressure yesterday as hopes for a diplomatic breakthrough in the US-Iran conflict saw oil prices tumble.
With Canadian data thin on the ground today, crude prices could continue to drive CAD movement. If hopes for peace continue to undermine oil prices, the ‘loonie’ could soften.
Australian dollar (AUD) firms as markets remain risk-on
The Australian dollar (AUD) edged higher overnight as hopes for a US-Iran peace deal continued to cheer markets, helping AUD shrug off disappointing trade data.
New Zealand dollar (NZD) supported by cheery trade
The New Zealand dollar (NZD) held near recent highs overnight, as the risk-on mood underpinned NZD.
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