Pound (GBP) directionless amid lull in data
Trade in the pound (GBP) was mixed at the start of this week, with the currency influenced more by external factors than domestic developments.
The focus on external factors saw GBP investors largely shrug off the latest UK manufacturing PMI, despite May’s finalised figures being revised slightly higher.
Coming up, GBP investors will look to comments by Bank of England (BoE) policymakers for fresh impetus today as they are grilled by the Treasury Select Committee.
Euro (EUR) gains capped ahead of expected ECB rate cut
The euro (EUR) trended broadly higher on Monday as the single currency was strengthened by its negative correlation with the US dollar (USD).
However, these gains remained limited in scope, with EUR investors remaining cautious ahead of the European Central Bank’s (ECB) upcoming interest rate decision.
A key focus today will be the Eurozone’s latest consumer price index. May’s preliminary CPI figures are expected to report another cooling of inflation, potentially stoking ECB rate cut bets and weakening the euro.
US dollar (USD) pressured by fresh trade policy uncertainty
The US dollar retreated through yesterday’s session as renewed US-China trade tensions and President Donald Trump’s move to raise tariffs on all steel and aluminium imports, revived US economic jitters.
These concerns were exacerbated by the latest ISM manufacturing PMI, which reported American factory sector growth slipped to a six-month low in May.
The US dollar may extend these losses today, if the latest US Job Openings and Labor Turnover survey (JOLTs) reports that the labour market continued to slow in April.
Canadian dollar (CAD) pressured by USD weakness
The Canadian dollar (CAD) ticked lower on Monday as the currency was hindered by its positive correlation with the US dollar.
Looking forward, CAD exchange rates may be guided by oil price movements today. If crude prices continue to rally, it may also carry the ‘loonie’ higher.
Australian dollar (AUD) slides as Chinese factory activity contracts
The Australian dollar (AUD) tumbled overnight on Monday as China’s Caixin manufacturing PMI contracted in April, likely weakening demand for Australian exports at the start of the second quarter.
New Zealand dollar (NZD) retreats in risk-off trade
The New Zealand dollar (NZD) also slumped in overnight trade amid a souring of market sentiment.
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