US dollar leaps higher amid risk aversion

Pound (GBP) softens ahead of BoE decision

The pound (GBP) slipped yesterday, with Sterling coming under pressure ahead of the Bank of England’s (BoE) interest rate decision on Thursday.

While the central bank is widely expected to leave interest rates unchanged, a recent run of weak UK data has raised the slight possibility of a rate cut, weighing on GBP sentiment.

This morning, the pound is attempting to claw back some losses following the latest UK consumer price index. The data showed inflation cooled in May but remained well above the BoE’s 2% target.

Euro (EUR) mixed despite upbeat German data

The euro (EUR) traded in a mixed range yesterday, despite Germany’s ZEW economic sentiment index smashing forecasts with a strong improvement in June.

The common currency’s upside potential was capped after Donald Trump accused the EU of failing to offer a ‘fair deal’ on trade and again threatened unilateral tariffs, dampening EUR sentiment.

Looking ahead, the Eurozone’s final inflation reading could influence EUR today. Unless the result deviates from forecasts, however, any impact may be muted.

US dollar (USD) strengthens as risk appetite fades

The US dollar (USD) initially struggled for direction yesterday amid an uncertain market mood, but sentiment soured later in the session, allowing the safe-haven ‘greenback’ to rally.

USD even managed to shrug off weaker-than-expected US retail sales and industrial production figures.

Today, investors will be keeping an eye on the latest initial jobless claims, but the main focus is the Federal Reserve’s interest rate decision. If the Fed reaffirms its hawkish outlook, the US dollar could extend its gains.

Canadian dollar (CAD) climbs with oil and USD

The commodity-sensitive Canadian dollar (CAD) strengthened yesterday, moving in step with the US dollar and supported by a recovery in oil prices.

With no major Canadian data due today, CAD is likely to remain sensitive to oil price dynamics.

Australian dollar (AUD) gains on commodities strength

The Australian dollar (AUD) edged higher overnight, finding support from rising commodity prices. Gains were limited by the mixed risk tone, but the resource-linked ‘Aussie’ still managed to tick upwards.

New Zealand dollar (NZD) subdued amid market uncertainty

The New Zealand dollar (NZD) fluctuated in a narrow range overnight, with mixed market sentiment offering little in the way of direction.

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