There was no economic data out of the UK overnight but that didn’t stop the Pound from having a rally. Prospects of a vaccine being closer spurred on the market as the Pound gained 1.22% against the USD. This could be seen as a surprise since the UK has a weak underlying economy as well as the lack of progression in Brexit talks. The ‘riskier’ currencies such as the AUD and NZD were overall winners yesterday with the Pound losing value against them. Tonight, the UK remains quiet on the data front.
Australia & New Zealand
Risk-on sentiment has surged the Aussie dollar to 11-week highs, currently trading at AUDUSD 0.6650. There’s optimism surrounding breakthroughs in a potential vaccine as human trials are to begin in Melbourne. This helped push up both the Australian and New Zealand dollar against other major currencies.
RBNZ’s Financial Stability Report came out earlier this morning with key positive statements such as “the financial system is in a solid position to weather the significant economic impact caused by the COVID-19”. The upbeat report could help the New Zealand Dollar gain further. The only data coming out for Australia will be Construction Work for Q1 later this morning. It will be another quiet day in terms of economic releases.
The Dollar finished it’s day significantly weaker yesterday, on the back of renewed optimism as countries continue to successfully lift restrictions. Progress on a possible vaccine also buoyed investor’s moods as Novavax began its human trials. Risk currencies all finished higher on the day reaching up to 1% gain against the Dollar.
Data today, we have Retail Sales for last week, the Richmond Fed Manufacturing Index and the Fed Beige Book print.
Overnight we saw the German Consumer Climate data come in below the forecast of -18.3 at -18.9, which is still up from last month’s -23.1. This together with an increase in risk appetite pushed the AUDEUR pair to a 3-month high of 0.6073 (1.6466) before it came back down to 0.6055 (1.6515).
Today the European Central Bank President Lagarde will be speaking which may give us a glimpse into what future monetary policy may look like for Europe. Even so, with limited economic data, it is likely that sentiment will drive the AUDEUR pair.