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US Dollar Loses Safe-Haven Appeal on Covid-19 Vaccine Trial

Pound News: UK Jobless Claims Jump to Highest Level Since 1996

Sterling edged higher against its main rivals, the Euro and US Dollar, overnight before steadying earlier this morning. This saw the currency recover after falling to seven-week lows, although the Pound did not take part in today’s relief rally as risk sentiment improved.

However, data revealed that the country’s jobless claims skyrocketed to the highest level since 1996 as the number of people making claims in April rose by 856,500.

Looking ahead to Wednesday, the Pound could edge lower following the release of UK inflation data. If inflation plummets below the Bank of England’s (BoE) target, Sterling will be left dampened.

Pound Euro News: German Investor Mood Improves

The Pound remained muted against the Euro as the boost in risk appetite sent traders away from typical safe-haven currencies, such as EUR. Meanwhile, data from Germany revealed concerns about the impact of the coronavirus crisis eased and hopes increased for a slow recovery in the second half of 2020.

ZEW’s monthly survey showed economic sentiment amongst German investors improved from 28.2 in April to a higher-than-forecast 51.0 in May. In a statement following the release of the data ZEW President, Achim Wambach said:

‘Optimism is growing that there will be an economic turnaround from summer onwards.’

Looking ahead, the single currency could struggle tomorrow following the release of April’s Eurozone inflation data. If inflation plummets further towards the lowest level since 2016, EUR will fall.

Pound US Dollar News: Covid-19 Drug Trial Boosts Risk Appetite

The Pound US Dollar exchange rate edged higher on Tuesday as the Dollar lost its safe-haven appeal after encouraging results from a coronavirus drug trial boosted riskier assets. Moderna Inc’s experimental coronavirus vaccine produced positive antibodies in a small group of healthy volunteers.

According to MUFG’s currency analyst, Lee Hardman:

‘The market’s positive reaction to the report is understandable as finding a vaccine for COVID-19 is the search for the Holy Grail. It would allow a return to normal at a much faster pace and significantly reduce long-lasting damage to the global economy.’

Looking ahead, the increase in risk appetite could be squashed following the release of the Federal Open Market Committee (FOMC) minutes. If the minutes from the Fed’s meeting are overly dovish highlighting the risks to the US economy, traders could flock back to the safety of USD.

Pound Canadian Dollar News: Oil Prices Steady as Lockdowns Ease

The Pound remained muted against the Canadian Dollar as oil prices remained steady on signs producers were cutting output as previously promised. Traders continue to wait for clarity on demand outlook as countries around the world ease lockdown measures.

However, the pick-up in global demand is expected to be slow as some restrictions are likely to remain in place for a significant length of time.

Looking ahead, the ‘Loonie’ could edge lower following the release of April’s inflation rate. If Canadian inflation plummets further due to the coronavirus pandemic, CAD could slide.

Pound Australian Dollar News: Dovish RBA Minutes Weigh on AUD

The Australian Dollar remained flat against the Pound as improved risk sentiment slightly offset dovish minutes from the Reserve Bank of Australia (RBA).

The RBA warned the country was facing an ‘unprecedented’ economic contraction despite the huge monetary and fiscal stimulus introduced to help cushion the blow from the coronavirus crisis.

Meanwhile, the ‘Aussie’ could suffer losses tomorrow following the release of Westpac’s leading index. If April’s index slumps further than expected, AUD could weaken.

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