The US dollar fell sharply on Monday as risk-on trade and falling US Treasury yields weighed heavily on the safe-haven currency.
Meanwhile, the pound appears to have stabilised at the start of this week, with GBP/EUR buoyed at €1.1559 and GBP/USD firming at $1.3959. GBP/CAD is rangebound at C$1.7727, while GBP/AUD and GBP/NZD have dipped to AU$1.8017 and NZ$1.9196, respectively.
Looking ahead, the focus at the start of this week’s session will be on Germany’s consumer price index. Will another acceleration in inflation buoy the euro today?
What’s been happening?The US dollar struck higher at the end of last week’s session, spurred on by a spike in US Treasury yields, as well as a flight to safety amid a souring of market sentiment.
The USD rally was tempered later in the session, however, after a stronger-than-expected rebound in US consumer spending last month helped to cheer markets.
This jump in the US dollar came at the expense of the euro, which fell afoul of the negative correlation in the pairing.
Adding to this pressure on the single currency were ongoing concerns over the EU’s vaccination drive, in spite of the EU’s pledge to ‘accelerate the provision of vaccines’.
The pound, meanwhile, found itself on the defensive again on Friday as the currency continued to suffer from profit taking in end-of-month trade.
What’s coming up?Turning to the start of this week, the spotlight will be on the publication of Germany’s latest consumer price index.
This is expected to report that inflation in the Eurozone’s largest economy continued to accelerate last month, likely bolstering the appeal of the euro later this afternoon.
For GBP investors, the focus this week will be on the publication of Chancellor Rishi Sunak’s 2021 Budget, which could see the pound resume its bullish run as Sunak is expected to expand the government’s fiscal stimulus.
Meanwhile, across the pond, USD investors will be keeping an eye out for US stimulus developments, with the US dollar potentially extending its gains if there are report of any more potential delays.
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)