EUR/USD firms as Powell cools tightening expectations
Philip McHugh June 23rd 2021 - 2 minute read
The US dollar weakened again on Tuesday, after Federal Reserve Chair Jerome Powell testified before Congress.
Meanwhile, the pound is trending positively so far this morning, with GBP/EUR buoyed at €1.1709 and GBP/USD stable at $1.3961. GBP/CAD is rangebound at C$1.7184, while GBP/AUD and GBP/NZD hold steady at AU$1.8496 and NZ$1.9893 respectively.
Looking ahead, the Eurozone’s and UK’s latest PMI releases will likely be the primary focus for investors today.
What’s been happening?
The US dollar opened yesterday’s session on the front foot, with the currency recouping some of Monday’s losses in response to an uptick in US Treasury yields.
However, the ‘greenback’ subsequently retreated in the wake of Jerome Powell’s testimony, in which the Fed Chair appeared to cool tightening expectations as he reiterated his stance that the current surge in inflation is transitory.
This pullback in the US dollar, alongside an improvement in Eurozone consumer confidence in June, opened the door for the euro to trend higher on Tuesday.
Meanwhile, the pound found itself on the defensive at the start of yesterday’s session, amidst ongoing Brexit uncertainty, before Sterling was able to claw back a good portion of these losses on the back of a stronger-than-expected rise in the Confederation of British Industry’s (CBI) latest industrial order release.
What’s coming up?
Turning to today session, the spotlight today looks to be on the latest Eurozone and UK PMI releases.
First up will be the Eurozone figures, which could help to buoy the euro this morning if activity in the bloc’s private sector continued to accelerate as expected this month.
This will be quickly followed by the UK’s own manufacturing and services PMIs, which may also be positive for the pound as economists predict another strong month of growth in both sectors.
Markit will also publish its latest US PMI estimates later this afternoon. While not as influential as the ISM PMI figures, the releases could nonetheless help the US dollar mount a recovery, if it indicates the US economy continued to expand at a record pace.