Pound (GBP) uncertain following mixed PMI
The pound (GBP) traded in a wide range yesterday as markets digested mixed UK PMI data.
The final services survey showed that activity softened to its slowest pace in 11 months in March, although rising price pressures reinforced expectations that the Bank of England (BoE) will raise interest rates this year.
UK economic data is in short supply today, leaving GBP to trade on wider market trends. So far, Sterling has surged against safer peers while sliding against riskier rivals.
Euro (EUR) supported by hawkish ECB expectations
The euro (EUR) rose against its weaker rivals yesterday, with EUR investors brushing off weak private-sector activity and instead focusing on inflation.
The Eurozone’s final PMI results for March revealed that input prices rose at the fastest pace in over three years, leading markets to price in multiple front-loaded rate increases from the European Central Bank (ECB).
Turning to today, a softer-than-forecast recovery in German factory orders in February and a forecast contraction in Eurozone retail sales later on could pressure EUR.
US dollar (USD) plummets as markets cheer US-Iran ceasefire
The US dollar (USD) softened yesterday, with the safe-haven currency unable to draw support from the gloomy market mood.
Concerns about US President Donald Trump’s threats to strike Iranian civilian infrastructure kept USD investors on the defensive, while a sharp decline in US durable goods orders in February also applied some pressure.
Overnight, the US and Iran agreed a two-week ceasefire, with Tehran set to open the Strait of Hormuz. A relief rally in markets has seen the safe-haven US dollar slump. USD could continue to languish today if the mood remains risk-on.
Canadian dollar (CAD) choppy as oil fluctuates
The crude-linked Canadian dollar (CAD) wavered yesterday amid oil price volatility. However, CAD ultimately trended lower as a weaker US dollar and downbeat Ivey PMI dragged on the currency.
CAD exchange rates are under notable strain today as oil prices plunged 15% on the news of the ceasefire in the Middle East. The ‘loonie’ will likely remain subdued through today’s session.
Australian dollar (AUD) soars amid risk-on rally
The Australian dollar (AUD) roared higher overnight as the de-escalation in the Middle East boosted market risk appetite.
New Zealand dollar (NZD) jumps as upbeat mood grips markets
The New Zealand dollar (NZD) also surged during last night’s Asian trading session amid the rapid improvement in the market mood and a hawkish tilt from the Reserve Bank of New Zealand (RBNZ) following its latest meeting.
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