Pound (GBP) Dips amid Fresh Coronavirus Concerns
The Pound (GBP) remained strong at the close of last week’s trading, buoyed by the comments from Bank of England (BoE) policymaker Gertjan Vlieghe hinting at the possibility of a more hawkish stance.
The upside in Sterling was reinforced by business secretary Kwasi Kwarteng, who said that there is no reason so far to delay the date for lifting the remaining lockdown restrictions.
However, Kwarteng’s comments are in contrast to warnings from the scientific community that the UK should delay further lockdown easing amid concerns of a third wave.
Today could see coronavirus worries continue to weigh on the Pound, which has relinquished its gains over the course of this morning.
Euro (EUR) Rebounds on Weakened USD
The Euro (EUR) ended the week on a low, dragged down by its negative correlation with the US Dollar (USD), which rallied on Friday.
The downside was offset somewhat by the Eurozone’s economic sentiment index, which beat market expectations and rose to the highest level in over three years.
Today, however, the Eurozone’s consumer price index release showed continued inflation last month, while USD weakness has helped to boost the single currency.
US Dollar (USD) Dented following Biden’s Budget Proposal
The US Dollar (USD) temporarily spiked on Friday following strong data from the US, but was pulled back down following Joe Biden’s budget proposal.
The US President’s proposed budget seeks to increase spending by $6trn, creating optimism among investors and a risk-on market mood that dampened demand for the safe-haven US Dollar.
This offset the US’s robust economic data releases, particularly the latest PCE price index for April, which beat market forecasts.
Today USD investors will be looking to the latest ISM manufacturing PMI to boost the currency, with the release expected to show another strong month of growth in factory activity.
Canadian Dollar (CAD) Rangebound as Oil Prices Hold Steady
The Canadian Dollar (CAD) remained stable through Friday’s trading session, with the commodity-linked ‘Loonie’ mostly rangebound as oil prices held steady.
Looking ahead, Canada’s GDP figures for the first quarter of 2021 could boost CAD exchange rates if they show that the Canadian economy continues to grow.
Australian Dollar (AUD) Dented by RBA Policy Decision
The Australian Dollar (AUD) dipped in overnight trade following the Reserve Bank of Australia’s (RBA) decision to keep interest rates at a record low.
Despite seeing a modest boost from the prevailing risk-on mood, the Australian Dollar could be further dented by its GDP release later this evening, which is expected to show that growth slowed in the first quarter of 2021.
New Zealand Dollar (NZD) Stable amid Upbeat Market Mood
The New Zealand Dollar (NZD) held steady during overnight trading, with a bullish market mood helping to keep the currency afloat despite business confidence falling well short of the forecast.