Daily Currency News – 11th June 2024.

  • US Dollar: Mixed performance influenced by softer-than-expected inflation data and geopolitical tensions, with speculation on the Federal Reserve pausing rate hikes.
  • Euro: Volatile session due to a sharper-than-expected decline in industrial production and political instability in Italy, with hints of potential ECB policy adjustments.
  • British Pound: Weakened by disappointing GDP growth figures and stalled Brexit negotiations, with some support from the Bank of England’s commitment to inflation targets.
  • Market Sentiment: Risk-off mode predominates due to geopolitical tensions, influencing demand for safe-haven currencies.
  • Outlook: Investors closely watching upcoming economic releases and central bank communications for further market direction.

US Dollar (USD)

The US Dollar has exhibited a mixed performance over the past 24 hours, with notable fluctuations influenced by recent economic data and geopolitical developments. As of 5 pm yesterday, the Dollar saw an initial dip following the release of the US Consumer Price Index (CPI) for May, which indicated a year-on-year inflation rate of 3.8%, slightly below the anticipated 4.0%. This softer inflation data has sparked speculation that the Federal Reserve may pause its interest rate hikes in the upcoming meeting, leading to a temporary weakening of the Dollar. However, the Dollar regained some ground later in the day as market sentiment shifted towards a risk-off mode due to rising tensions in the Middle East, which increased demand for the safe-haven currency. Overall, the USD ended the day relatively unchanged against major currencies, maintaining its cautious outlook amidst mixed economic signals.

Euro (EUR)

The Euro has experienced a volatile session, primarily driven by the latest industrial production figures and ongoing political uncertainties within the Eurozone. Industrial production data released this morning revealed a month-on-month decline of 0.6% for April, a sharper drop than the forecasted 0.2%. This negative data point has put downward pressure on the Euro, exacerbating concerns over the region’s economic resilience. Additionally, political instability in Italy, where the coalition government faces increasing internal conflict, has added to the Euro’s woes, dampening investor confidence. Despite these headwinds, the Euro managed to claw back some losses by late afternoon, as European Central Bank (ECB) officials hinted at potential policy adjustments to support economic recovery. The EUR/USD pair has struggled to find clear direction, reflecting the current uncertainties in the Eurozone.

British Pound (GBP)

The British Pound has faced headwinds in the latest trading session, impacted by disappointing economic data and ongoing Brexit-related uncertainties. The UK’s GDP growth figures released this morning showed a contraction of 0.1% in April, missing the expectations of a 0.1% expansion. This unexpected contraction has raised concerns about the UK’s economic outlook, putting pressure on the Sterling. Additionally, the latest Brexit negotiations have hit a stumbling block, with reports suggesting little progress on key trade agreements, further weighing on the Pound. Despite these challenges, the GBP found some support from comments by the Bank of England’s Governor, who reiterated the central bank’s commitment to achieving its inflation target, hinting at potential rate hikes if necessary. The GBP/USD pair has experienced a choppy session, reflecting the mixed economic signals and ongoing Brexit complexities.

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.