US tariff uncertainty injects fresh volatility into the US dollar

Pound (GBP) buoyed by UK-US trade deal hopes

The pound (GBP) strengthened yesterday as the increasingly risk-sensitive currency benefitted from an improvement in market sentiment.

Aiding Sterling’s ascent was fresh optimism that the UK could soon reach a deal with the US to secure an exemption from tariffs.

The release of the UK’s latest jobs data is tempering demand for the pound this morning, as weaker-than-expected wage growth in February stokes bets for a Bank of England (BoE) rate cut next month.

Euro (EUR) slips amid profit-taking

The euro (EUR) stumbled on Monday as a bout of profit-taking undermined the currency.

EUR exchange rates have surged over the past couple of weeks amid widespread weakness in the US dollar (USD), with EUR investors taking the opportunity to book some of their recent profits ahead of the European Central Bank’s (ECB) rate decision later this week.

The euro may be met by additional selling pressure today as Germany’s latest ZEW economic sentiment index is forecast to report morale deteriorated rapidly this month.

US dollar (USD) pressured by tariff uncertainty

The US dollar stumbled out of the gate this week after social posts from US President Donald Trump stoked confusion over US trade policy.

The posts appeared to contradict reports that emerged over the weekend suggesting smartphones and other electronics would be exempt from Trump’s 145% tariffs on Chinese imports.

USD investors may continue to unwind their positions through the coming session if this uncertainty continues to feed into a wider dollar confidence crisis.

Canadian dollar (CAD) slips despite rising oil prices

The Canadian dollar (CAD) softened on Monday despite a modest rebound in oil prices.

Canada’s latest consumer price index may support the ‘loonie’ today, if another strong inflation print bolsters hawkish expectations for the Bank of Canada’s (BoC) interest rate decision on Wednesday.

Australian dollar (AUD) firms following RBA minutes

The Australian dollar (AUD) trended higher overnight on Monday, after the minutes from the Reserve Bank of Australia’s (RBA) latest policy meeting suggested policymakers are still reluctant to commit to future rate cuts.

New Zealand dollar (NZD) buoyed by positive risk flows

The New Zealand dollar (NZD) also rallied in overnight trade, with the ‘kiwi’ catching bids amid the improving market mood.

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