The Australian dollar trended lower through the majority of last week, with the risk-sensitive currency struggling to attract support as a gloomy market mood prevailed through most of the session.
Meanwhile, trade in the pound is mixed this morning, with GBP/EUR slipping to €1.1737 and GBP/USD buoyed at $1.2588. GBP/CAD is stable at C$1.6091, while GBP/AUD and GBP/NZD hold steady at AU$1.7737 and NZ$1.9520, respectively.
Looking ahead, will lacklustre PMI releases from the UK and Eurozone weaken demand for the pound and euro this morning?
The US dollar got off to a poor start this week, with investors shunning the safe-haven currency as a bullish market mood prevailed.
What’s been happening?
The sanguine mood comes amid hopes China may soon begin easing its Covid lockdowns.
Due to its negative correlation with the US dollar, the euro quickly found support on Monday.
Reinforcing the euro were comments from European Central Bank (ECB) President Christine Lagarde, in which she suggested the bank is likely to exit negative rates by the end of the third quarter, with its first interest rate hike to take place in July.
The pound, meanwhile, was underpinned by risk-on flows yesterday, with additional support being drawn from some hawkish comments from Bank of England (BoE) Governor Andrew Bailey.
What’s coming up?Turning to today’s session the focus is likely to be on the latest PMI releases from the UK and Eurozone.
Up first will be the Eurozone releases. Analysts forecast growth in the bloc’s private sector growth will have slowed modestly this month, potentially undermined the euro this morning.
However, economists are predicting the slowdown in the UK’s private sector will be even more notable, likely leading to greater losses for the pound.
Any pullback in Sterling may be further compounded by the release of the Confederation of British Industry’s (CBI) distributive trades index, with May’s release expected to report another sizable slump in retail sales volumes.
Finally, USD investors are likely to look to a speech by Federal Reserve Chair Jerome Powell for fresh impetus later this evening.
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)