Pound Sterling (GBP)
While the British Pound initially rallied after Prime Minister David Cameron announced the EU referendum will take place on June 23rd, following his successful campaign to persuade EU member states to back reforms, the appreciation was short-lived. After Mayor of London Boris Johnson announced he will campaign for the UK to leave the EU, the Pound dived versus its major peers. Johnson is a political heavyweight and is likely to garner plenty of support from those undecided about how to vote. Most traders are resigned to the high likelihood that the British Pound will endure pronounced volatility in the build-up to the referendum.
Following less-than-ideal domestic ecostats, the Euro declined versus the majority of its most traded currency rivals. Of particular disappointment was French Services and Composite PMIs which both unexpectedly dropped into contraction territory. What’s more, German Manufacturing PMI showed output at near stagnation with the score of 50.2 dangerously close to the 50 mark which separates growth from contraction.
US Dollar (USD)
As global equity values track crude oil price gains, market sentiment improved. Despite heightened demand for high-yielding assets, the US Dollar still managed to edge higher versus most of its major rivals. The appreciation can be linked to Euro weakness thanks to negative correlation. Later during the North American session the US Dollar may see heightened volatility in response to February’s Markit Manufacturing PMI.
Australian Dollar (AUD)
As expressed above, market sentiment improved in line with rising global stock values and higher crude oil prices. This supported demand for the high-yielding Australian Dollar with an absence of domestic data to provoke changes. Speculation that the Federal Reserve will hold off from tightening policy as they enter ‘wait-and-see’ mode has also supported ‘Aussie’ (AUD) demand today.
New Zealand Dollar (NZD)
Similarly to its South Pacific neighbour, the New Zealand Dollar advanced versus most of its major peers on Monday thanks to improved risk appetite. Also supportive of demand for the ‘Kiwi’ (NZD) was positive domestic data which showed January’s Credit Card Spending saw annual growth of 8.9%.
Canadian Dollar (CAD)
Rising crude oil prices have seen the Canadian Dollar advance versus most of its peers with high-yield demand also supportive of ‘Loonie’ (CAD) gains. With an absence of domestic data to stimulate volatility the Canadian asset is likely to hold gains as crude prices continue to advance.