Pound holds uptrend as UK Lockdown Easing Begins

Australian Dollar (AUD) Positive despite Cautious Market Mood

The Australian Dollar (AUD) found some support yesterday despite a cautious market mood as equity markets dipped.

As equity markets reacted to the liquidation of $20 billion in stocks, AUD investors appeared to trade cautiously.

However, in the absence of fresh domestic data AUD exchange rates could soon find themselves shedding ground once again.

Pound (GBP) Trends Higher as Lockdown Measures Begin Easing

The Pound (GBP) remained on an uptrend at the start of the week as the UK began easing some of its lockdown restrictions.

As the number of people in the UK who have received a vaccine passed 30 million, the UK seems on course to reopen on schedule, supporting GBP exchange rates.

As lockdown conditions finally began to ease, this gave consumers renewed cause for confidence in the economic outlook, especially as data showed a rise in retail footfall already forming.

Even so, as uncertainty continues to hang over the economy the Pound may struggle to sustain its gains over the course of the day.

Euro (EUR) Sees Lacklustre Demand Ahead of German Inflation

The Euro (EUR) proved lacking in support during Monday’s trading session, especially as the appeal of more risk-sensitive assets improved.

Demand for the single currency remained limited as worries over the Eurozone’s handling of the Covid-19 crisis persisted. With the currency union facing further disruption as tighter lockdown conditions come into place, EUR exchange rates stumbled, dragged lower by the prospect of a further slowdown in economic activity.

If the headline German inflation rate picks up as anticipated this evening, though, the Euro could return to a stronger footing against its rivals.

US Dollar (USD) Muted in Spite of Manufacturing Index Jump

The US Dollar (USD) struggled to capitalise on a stronger-than-expected surge in the Dallas Fed manufacturing index overnight.

Although the index leapt from 17.2 to 28.9, this was not enough to give the US Dollar any particular boost against its rivals.

However, with forecasts pointing towards an improved consumer confidence index, the mood towards the US Dollar could improve further tonight.

Canadian Dollar (CAD) Stumbles as Suez Canal Blockage Cleared

The Canadian Dollar (CAD) faltered in the wake of news that the vessel blocking the Suez Canal had been freed.

With traffic through the major trade artery now free to resume, the commodity-correlated Canadian Dollar came under renewed pressure. As oil prices had benefitted from the disruption, with global oil supply temporarily thrown into disarray by the blockage, CAD exchange rates were left vulnerable to weakness as conditions returned to normal.

Even so, the Canadian Dollar may find a fresh rallying point on the back of January’s average weekly earnings data.

New Zealand Dollar (NZD) Supported by Market Risk Appetite

The New Zealand Dollar (NZD) benefitted from a general improvement in market risk appetite at the start of the week.

While fresh domestic data remained lacking from the economic calendar, this failed to keep the ‘Kiwi’ from pushing higher against many of the majors yesterday. With doubts over the outlook of the global economy temporarily diminished NZD exchange rates found room to strengthen.

As forecasts point towards a sharp decline in February’s building permits figure, however, the appeal of the New Zealand Dollar may well weaken once again.

Data Releases

08:45 NZD Building Permits (Feb) -4.3%
23:00 EUR Germany Inflation Rate (Mar) 1.7%
23:30 CAD Average Weekly Earnings (Jan)
01:00 USD CB Consumer Confidence (Mar) 96.9

Louisa Heath

louisa.heath@torfx.com


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