The US dollar fell sharply on Monday as risk-on trade and falling US Treasury yields weighed heavily on the safe-haven currency.
Meanwhile, Sterling looks to be mounting a recovery this morning, with GBP/EUR rising to €1.1257 and GBP/USD rebounding to $1.3705. GBP/CAD is stable at C$1.7399, while GBP/AUD and GBP/NZD hold steady at AU$1.7713 and NZ$1.9003, respectively.
Coming up, the publication of Germany’s latest business climate index is likely to be the focus for this morning, with the euro likely to sustain some losses if business morale declined this month.
What’s been happening?The pound plummeted at the end of last week’s session in response to some dire UK data releases.
This was kicked off by the UK’s latest retail sales release, which reported that sales growth in 2020 saw a record fall, as a jump in online sales was not enough to offset the collapse of the high street.
Even more damaging to Sterling sentiment were this month’s preliminary PMIs, which revealed that economic activity contracted at a faster pace than expected, stoking fears of a sizable fall in first quarter GDP.
The euro, on the other hand, benefitted from the publication of stronger-than-expected PMI releases, with the Eurozone’s private sector proving surprisingly robust in light of the ongoing coronavirus restrictions.
Finally, we saw the US dollar initially strengthen on Friday amidst a souring of market sentiment.
However, the ‘Greenback’ weakened later in the session as Joe Biden brought some cheer back to the market by outlining his economic policy goals.
What’s coming up?Looking ahead to the start of this week’s session, the focus will be on Germany’s latest IFO business climate index.
This could lead to some weakness in the euro this morning if Germany’s extended lockdown measures resulted in a deterioration of business morale.
In the spotlight for GBP investors in the first half of this week will be the publication of the UK’s jobs figures.
Sterling could tumble in response as economists forecast the UK’s unemployment rate will have risen above 5% for the first time since 2016 in November, amidst the pressures of a second national lockdown.
Meanwhile, the publication the latest US GDP figures are likely to be the highlight for USD investors this week. This may see the US dollar give some ground later in the week as a positive growth reading is likely to buoy market sentiment at the expense of the safe-haven ‘Greenback’.
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)