The Pound was held in check by the Euro yesterday morning and Pound selling increased after the Euro moved back below 1.1765. Sterling also failed to hold above 1.3900 to the Dollar which also triggered renewed selling interest leading to lows near 1.3820 and the Euro strengthened to near 1.1695.
Confidence in the UK economic recovery remains strong but the comparative advantage over the Eurozone will likely narrow over the next few months, especially after new reports of vaccine supply difficulties over the next few weeks. This Pound uncertainty was amplified by new doubts over the AstraZeneca vaccine safety. However the rollout of the first Moderna vaccines begins today. Sterling posted only a transitory recovery against the US Dollar but the Euro strengthened to 1.1686.
Sterling has dipped below 1.3800 to the Dollar by market open this morning and the Euro has climbed to 1.1625 as UK currency sentiment appears more fragile.
The JOLTS data recorded an increase in job openings to 7.37mn for February from 7.10mn the previous month and above consensus forecasts of 7.00mn. The IBD consumer confidence index strengthened to 56.4 from 55.4 previously.
US yields continued to move lower after yesterdays Wall Street open which had a significant impact in undermining dollar demand. There were some reservations over an increase in US coronavirus cases, but the vaccine programme continued to make strong headway, reinforcing hopes that cases would not lead to serious illness.
The IMF also upgraded its global growth outlook which helped underpin risk conditions. Markets had already shifted their expectations sharply, limiting any impact and yields continued to edge lower. The five-year yield declined to 0.87% from a 14-month high of 0.99% on Monday which continued to sap dollar support.
Markets will continue to monitor Administration infrastructure plans with Biden due to speak later on today. The latest Federal Reserve minutes will also be watched closely.
The Euro was able to resist renewed selling pressure as the Dollar was unable to secure fresh traction. There were also reports coming from internal documents that the EU was on track to vaccinate close to 60% of the total population by the end of June. Implying that the EU is likely to exceed the target of 70% vaccination rates by the end of the Summer.
There will be scope for a significant boost underlying Euro sentiment if actual vaccination figures suggest that the revised target is within reach. The single currency was resilient despite a further increase in French hospitalisation cases to over 30,000 as confidence in the outlook improved.
As of writing, the Euro currently trades around the 1.1875 mark against its US counterpart.
Data to watch
All Day - All Currencies - G20 Meeting
15:30 - USD - Crude Oil Inventories
19:00 - USD - FOMC Meeting Minutes
Posted in Daily Market News on Apr 7 2021