Pound (GBP) struggles to sustain gains despite hawkish BoE
The pound (GBP) initially firmed yesterday, as the optimism surrounding Germany’s new debt brake deal buoyed Sterling on hopes the UK economy will see some spillover benefit.
However, the upside in GBP exchange rates proved short-lived, despite some hawkish comments from Bank of England (BoE) policymakers.
In the absence of any notable UK economic releases, the pound may struggle for direction today.
Euro (EUR) surges on German spending hopes
The euro (EUR) enjoyed strong support on Wednesday, following the news that the likely partners of Germany’s next coalition government had reached an agreement regarding a new debt brake deal.
It’s hoped this will unlock hundreds of billions of euros for defence and infrastructure spending, which could help revive the fortunes of the Eurozone’s largest economy.
Coming up, the European Central Bank (ECB) will deliver its latest interest rate decision later this afternoon. If the bank cuts rates as expected and signals it will continue to ease its monetary policy in the coming months, the euro is likely to relinquish some of its recent gains.
US dollar (USD) slumps amid growing recession fears
The US dollar (USD) continued to retreat yesterday after US President Donald Trump conceded the US economy will need to weather ‘a little disturbance’ in a speech before a joint session of Congress.
His remarks, coupled with weaker-than-expected US employment data, stoked US recession fears and saw bets grow that the Federal Reserve will begin cutting interest rates in May.
If these fears persist into today’s session, it's likely the USD selling bias will remain firmly in place.
Canadian dollar (CAD) undermined by US tariff concerns
The Canadian dollar (CAD) weakened on Wednesday as the currency continued to be buffeted by US tariff concerns as well as a further softening of oil prices.
However, the ‘loonie’ may find some respite later today, if the latest Ivey PMI reports activity in the Canadian economy returned to growth last month.
Australian dollar (AUD) supported by positive trade figures
The Australian dollar (AUD) trended broadly higher overnight on Wednesday, with the ‘Aussie’ finding support after Australia recorded a larger-than-expected trade surplus in January.
New Zealand dollar (NZD) buoyed in upbeat trade
The New Zealand dollar (NZD) also firmed in overnight trade as it was underpinned by risk-positive flows.
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