A renewed sense of political anxiety gripped the pound ahead of the weekend as the Conservative leadership contest came down to its final two candidates.
- Euro vulnerable ahead of ECB commentary
- Trade worries drag Canadian dollar down
- Brexit speculation continues to drive pound
Signs of ECB dovishness set to weigh on euro
Given recent evidence of weakness within the German manufacturing sector investors have seen limited incentive to favour the euro over its rivals.
The mood towards the euro could sour further this afternoon if comments from European Central Bank (ECB) President Mario Draghi prove dovish in nature.
Signs that the ECB could maintain its current dovish bias for the foreseeable future would limit the appeal of the single currency today.
On the other hand, if Draghi sounds a more positive note on the economic outlook EUR exchange rates could return to a stronger footing.
Escalating global trade tensions weigh on Canadian dollar
The latest escalation in trade tensions between the US and China put pressure on the Canadian dollar yesterday, with oil prices trending sharply lower.
As long as market risk aversion persists CAD exchange rates could struggle to return to a positive footing.
Confidence in the outlook of the Canadian economy may also diminish this afternoon if April’s housing starts figure shows a decline on the month.
Evidence that the Canadian construction sector is slowing would give investors fresh reason to sell out of the Canadian dollar today.
Pound jittery as Brexit talks resume
As markets braced for the latest round of talks between Labour and the Conservatives this left the pound on a weaker footing across the board.
The continued lack of progress towards a resolution of the Brexit issue dampened the appeal of the pound, even though the threat of an imminent no-deal exit has diminished significantly.
However, any positive signs of progress could give GBP exchange rates a strong rallying point today as investors continue to speculate over the political outlook.
As long as the prospect of a breakthrough remains distant, though, this is likely to limit the strength of GBP exchange rates.
Wednesday, 8th May 2019
12:30 EUR European Central Bank President Mario Draghi Speaks
13:15 CAD Housing Starts
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)