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US dollar weakens amid positive market mood

currency-newsUS dollar weakens amid positive market mood
The US dollar retreated at the start of this week, with the currency faltering in the face of improving market sentiment.

Meanwhile, the pound is holding in a narrow range so far this morning, with GBP/EUR muted at €1.1702 and GBP/USD flat at $1.3563. GBP/CAD is rangebound at C$1.6870, while GBP/AUD and GBP/NZD hold steady at AU$1.8272 and NZ$1.8951 respectively.

Looking ahead, will another deterioration in German economic sentiment send the euro lower this morning?

What’s been happening?

The US dollar stumbled through Monday’s trading session, with the appeal of the safe-haven currency being undermined by a prevailing risk-on mood.

This upbeat mood appeared to be linked to optimism surrounding Pfizer’s new Covid pill, after clinical trials revealed that it reduces the risk of hospitalisation or death by 89% in vulnerable patients.

The pound opened this week on some strong footing. There was no clear catalyst for the rally, but it may be driven in part by the currency’s recent fall, which may be attracting investors looking for a bargain.

The euro meanwhile, struggled to attract any notable support yesterday, following comments from European Central Bank (ECB) chief economist Philip Lane, after he suggested a premature tightening of monetary policy in response to rising inflation would be counterproductive.

What’s coming up?

In the spotlight at the start of today’s session will be the publication of Germany’s latest ZEW economic sentiment index.

November’s surveys are expected to report another slump in sentiment in the Eurozone’s largest economy, which could see the euro face some headwinds this morning.

EUR investors will also be on the lookout for a speech by ECB President Christine Lagarde later this afternoon, which could also offer fresh impetus for the single currency.

For USD investors the focus will be on the release of the US PPI figures later this afternoon. A rise in producer prices last month could bolster expectations for Wednesday’s inflation print and boost the US dollar.

In the absence of any notable UK data, movement in the pound may be driven by Brexit developments, potentially leaving the currency vulnerable to losses if headlines remain broadly negative.  
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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