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US dollar fluctuates in mixed trade

currency-newsUS dollar fluctuates in mixed trade
The US dollar trended in a wide range yesterday as fluctuating market risk appetite led to erratic trade in the safe-haven currency.

Meanwhile, trade in the pound is mixed this morning, with GBP/EUR slipping to €1.1620 and GBP/USD retreating to $1.2198. GBP/CAD is rangebound at C$1.5901, while GBP/AUD and GBP/NZD climb to AU$1.7706 and NZ$1.9522, respectively.

Looking ahead, expect the UK’s weaker-than-expected GDP figures to weigh on Sterling through today’s session.

What’s been happening?

The US dollar softened through yesterday’s European trading session as demand for the safe-haven currency was undermined by a prevailing risk-on mood.

This decline persisted at the start of the US session in spite of a hotter-than-expected US CPI release. US inflation came in at 8.3% in April, down from 8.5% in March ahead of the 8.1% forecast by economists.

However, USD exchange rates then rallied overnight as another slump in equity markets spooked investors and revived safe-haven demand.

Meanwhile, the upbeat mood helped to boost the pound yesterday, which strengthened in spite of renewed Brexit uncertainty. Following fresh threats from the UK government to scrap the Northern Ireland Protocol.

The euro trended broadly lower on Wednesday. This drop in EUR exchange rates came despite comments from European Central Bank (ECB) President Christine Lagarde in which she suggested a rate hike could come ‘a few weeks’ after the bank ends its asset purchasing programme at the start of the third quarter. Opening the door to a July rate hike.

What’s coming up?

Kicking off today’s session was the publication of the UK’s latest GDP figures.

This is exerting some pressure on the pound after the headline figures reported UK growth slowed from 1.3% to 0.8% in the first quarter of 2022, while the accompanying month-on-month release revealed the economy contracted in March after stalling in February.

Across the pond, the release of the latest US PPI figures could weaken the US dollar if they confirm producer prices softened last month.

Conversely an expected fall in latest week’s US initial jobless claims could lend some support to USD exchange rates this afternoon.

Finally, in the absence of any EUR data of note, the euro could struggle to attract support today.
Philip McHugh

Philip McHugh

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)

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