G7 Summit Jitters Fail to Dent Pound (GBP)
As the G7 summit kicked off in Cornwall on Friday, the Pound (GBP) was seen to strengthen against many of its peers.
Sterling’s gains came despite rising coronavirus cases and continued friction regarding the Northern Ireland protocol, which puts a strain on UK / EU relationships.
Looking ahead, the Pound (GBP) may stumble today if a delay in lockdown easing is announced as predicted. Boris Johnson is expected to hold off on lifting the last band of restrictions for a further four weeks as cases of the Delta variant have risen.
ECB Concerns Put Pressure on Euro (EUR)
Friday saw the Euro (EUR) slip against the Pound, with the pairing falling to a one-month low.
The European Central Bank’s (ECB) interest rate decision, announced earlier last week, promoted a dovish attitude which continues to put pressure on the single currency.
The Euro also lost ground as the US Dollar rebounded, the single currency suffering from its negative correlation with the ‘Greenback’.
With today’s industrial production figures from the Eurozone showing an increase in factory output, there’s a chance the Euro may rally.
Bearish Trading Prompts Uptick in US Dollar (USD)
The US Dollar (USD) reached its highest value against the Euro in almost a month, climbing through Friday’s trading session as a bearish mood prevailed.
The Federal Reserve’s imminent interest rate decision has increased demand for the safe-haven currency amidst a risk-off sentiment.
Rising tensions between the West and China may also be influencing investors as G7 leaders criticise the latter and China retaliates with an accusation of ‘political manipulation’.
Today’s consumer inflation expectations for May are forecast to reach a record high of 3.8%, which may further support the US Dollar, feeding speculation about the Fed’s interest rate decision on Wednesday.
Strength of USD Puts Pressure on Canadian Dollar (CAD)
Rising crude prices were able to buoy the oil-sensitive Canadian Dollar (CAD) briefly on Friday morning, before an upturn in USD pushed the ‘Loonie’ back to its previous position.
In spite of WTI crude prices reaching highs of $71.50 a barrel this morning, a forecasted contraction of 1.1% in April’s manufacturing sales may weigh upon CAD, making gains difficult.
Australian Dollar (AUD) Slips as Bearish Trading Prevails
Friday also saw a rise and fall in the Australian Dollar (AUD) as the ‘Aussie’ succumbed to a risk-off market mood.
AUD remained subdued overnight as the cautious sentiment persisted, but begins to see moderate gains this morning.
Risk-Off Sentiment Sees Stumble in New Zealand Dollar (NZD)
The New Zealand Dollar (NZD) sees a similar pattern, firming then stumbling at the end of last week’s session and overnight as a bearish mood prevailed.
This morning the ‘Kiwi’ also sees an upturn as the New Zealand Institute of Economic Research (NZIER) revised up the South Pacific Island nation’s near-term economic growth outlook.