The euro is languishing near a 10-week low compared the dollar. The common currency has had little reaction to the upbeat German IFO survey, which showed an improvement in business sentiment, adding to a previous upside in German Consumer Climate. Continued Fed speak and a rally in European stocks are posing a double whammy for the euro. The downgrade of Deutsche Bank’s debt rating by Moody’s, a credit rating agency, is further denting the currency.
The British pound has maintained its overnight gains, with short-term buying interest surging based on positive sentiment surrounding the upcoming referendum. It’s one of the few currencies bucking the theme of US dollar strength as investor fears about Brexit lighten. A report on UK’s GDP Q1, coming tomorrow, will determine if the sterling’s recent confidence is sustainable.
As global sentiment turns risk-on, those that are bullish on the USD might become cautious. The markets will be keenly waiting for Friday’s preliminary GDP data and next week’s US monthly job report for May, which could play a key role in determining the Federal Reserve’s monetary policy stance at its June meeting.
Asian markets are strongly up this morning and crude oil is extending its gains. The US gauge, the West Texas intermediate, is around 49.35 a barrel, while the international measure, the Brent crude, is about 49.26. This combination of positive news has boosted the Australian dollar, which had been suffering from commodity weakness and a greenback rally. Though AUD will continue grappling with dismal iron ore prices, the currency could see gains against the US dollar if markets price out a Fed June rate hike. Meanwhile, the Canadian loonie, which has been under-performing against USD recently, is poised for the release of Bank of Canada’s May interest rate statement at 10 a.m. ET.
EURUSD: Euro sees little gains despite positive data.
GBPUSD: Pound standing proud on continued Brexit positivity.
AUDUSD: Aussie dollar recovering after USD starts off the morning weaker.
USDCAD: Canadian dollar is up slightly as oil extends gains.