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Major Currencies Rangebound ahead of US Inflation Figures

Pound (GBP) Wavers on Brexit and Coronavirus Worries

The Pound (GBP) had a turbulent day of trading yesterday, dipping against many of its peers before recovering at the end of the day’s session, with Brexit and coronavirus concerns weighing on Sterling.

Growing tensions between the EU and UK over the Northern Ireland protocol have been putting pressure on the Pound, with the EU warning of tough retaliatory measures if the UK does not uphold the agreement over the Irish Sea border.

Meanwhile, coronavirus cases continue to rise in the UK, with the prospect of a delay to the UK’s economy reopening fully also dampening demand in GBP.

Looking ahead, with no major data releases from the UK, Brexit and coronavirus developments are likely to keep driving GBP movement in today’s trading session.

Euro (EUR) Flat following Lacklustre Data

The Euro (EUR) was relatively rangebound through yesterday’s session, following some mixed economic data from the bloc.

Unemployment rose by 0.3% in the first quarter of 2021, in line with market predictions, and economic sentiment printed below expectations, though it remains at a 17-year high.

The latest GDP figures for the first quarter of this year beat market expectations, with the economy contracting 0.3%, rather than the 0.6% contraction that was forecast. With these releases showing no clear directional bias, EUR traded mostly sideways yesterday.

Turning to today, Germany’s latest balance of trade figures show a trade surplus of €15.5bn – exceeding expectations of €12.5bn – which could boost the Euro.

US Dollar (USD) Steady ahead of Inflation Figures

The US Dollar (USD) traded in a narrow range through Tuesday’s sessions, making some modest gains on promising economic data.

The latest balance of trade figures from the US showed that the trade deficit had shrunk by $6bn, while the JOLTs job openings data beat market expectations to report that job vacancies in the US rose by almost one million to a new record high in April.

With data thin on the ground today, USD could continue to trade sideways as investors wait for more significant data releases later in the week, namely the US inflation data and the ECB’s interest rate decision on Thursday.

Canadian Dollar (CAD) Dips despite High Oil Prices

The Canadian Dollar (CAD) slipped yesterday, despite reporting a surprise trade surplus of CAD$0.59bn, beating market expectations of a CAD$0.7bn deficit.

The commodity-sensitive ‘Loonie’ was also unaffected by the strong global demand for oil, with crude prices continuing to rise.

Looking ahead, today’s Bank of Canada (BoC) interest rate decision may impact CAD exchange rates, with a continued dovish stance potentially weighing on the Canadian Dollar.

Australian Dollar (AUD) Steady following RBA Remarks

The Australian Dollar (AUD) traded sideways overnight, despite consumer confidence falling to a five-month low amid fresh coronavirus fears.

The ‘Aussie’ was buoyed by upbeat comments from the Reserve Bank of Australia’s (RBA) Assistant Governor (Financial Markets) Christopher Kent, who said that the RBA forecasts good growth and an increase in wages and prices.

New Zealand Dollar (NZD) Rangebound on Mixed Data

The New Zealand Dollar (NZD) was also flat in overnight trade following mixed data. Manufacturing sales grew by 4.3%, beating market expectations of a 3.5% increase, while a preliminary estimate of business confidence fell two points from last month.

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