US dollar turbocharged as US and China agree to lower tariffs

Pound (GBP) slides despite hawkish BoE messaging

The pound (GBP) trended broadly lower through yesterday’s session amid a sharp appreciation of many of its peers.

The drop in Sterling came despite comments from Bank of England (BoE) Deputy Governor for Monetary Policy, Clare Lombardelli, suggesting that a cautious approach to future interest rate cuts remains appropriate.

Meanwhile, movement in the pound may be subdued today, after the UK’s latest jobs data reported a rise in unemployment and slowdown in wage growth.

Euro (EUR) pressured by risk-on flows

The euro (EUR) proved to be one of the worst-performing major currencies on Monday, as investors, by and large, shunned safe-haven assets.

Compounding these losses was the single currency’s negative correlation with the US dollar (USD), which proved the primary beneficiary of yesterday’s rally.

Coming up, the euro may be able to mount a comeback today, if Germany’s latest ZEW economic sentiment index reports morale recovered this month.

US dollar (USD) soars on US-China trade agreement

The US dollar got off to a roaring start this week, following the news that the US and China had agreed to a 90-day trade truce, which would see both powers lower their respective tariffs by 115%.

The news was cheered by USD investors amid hopes the de-escalation reduces the risk of a US recession.

The spotlight now turns to the latest US consumer price index. An acceleration of inflation last month will likely validate the Federal Reserve’s recent hawkish tilt, which could extend the US dollar’s bullish momentum.

Canadian dollar (CAD) underpinned by rising oil prices

The Canadian dollar (CAD) drew support from a sharp rise in oil prices on Monday, which helped offset broader concerns about how US trade policy is impacting the Canadian economy.

Movement in the ‘loonie’ will likely remain tied to oil price dynamics today, with CAD exchange rates poised to strengthen if crude prices continue to rally.

Australian dollar (AUD) jumps amid rebound in consumer confidence

The Australian dollar (AUD) shot higher overnight on Monday, with the ‘Aussie’ drawing support from a rebound in domestic consumer confidence this month as well as the risk-positive market mood.

New Zealand dollar (NZD) strengthens in risk-positive trade

The New Zealand dollar (NZD) also rallied in overnight trade as the upbeat market mood made the currency more attractive to investors.

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