FX Roundup: Euro slide continues, but pound sees modest gains

The euro tumbled lower for a third successive session on Wednesday, while the pound saw modest intraday upticks as Brexit concerns eased on opinion polling data.

The Eurozone’s unexpected entry into deflation in February continued to weigh on the euro in the absence of fresh data. Statistics published by Eurostat on Monday revealed the consumer price index fell 0.2% year-on-year this month, compared to analysts’ expectations of 0.0% and January’s 0.3% gain.

At 1702 GMT, the euro was another 0.24% and 0.91% lower against the dollar and pound, changing hands at $1.0842 and £0.7719 respectively.

Kit Juckes, head of forex at Societe Generale, said, “A risk-on world with rising Treasury yields is not going to help the yen, and the contrast between the US and Eurozone data is going to keep up the pressure on the euro, even if EUR/USD 1.08 remains a significant hurdle.”

Meanwhile, a pound fetched $1.4047, rising 0.68% intraday versus the dollar. With a referendum on the UK’s membership of the European Union set for 23 June, a new ComRes poll showed 55% of Britons were worried a vote to leave the union will weaken the pound and 43% said the value of sterling will be an important factor in how they vote in the referendum in June.

Elsewhere, the greenback fell 0.17% versus the yen, changing hands at JPY113.82 and saw a mixed session against commodity crosses.

The US currency rose 0.45% against the Canadian dollar changing hands at CAD$1.3470. Jane Foley, senior FX strategist at Rabobank, said, “Given also the vulnerability of the oil price we see scope for further upside in CAD versus the USD as being limited this year and can’t rule out the risk of another spike above USD/CAD1.40 on a six-month view. Assuming a strengthening in growth and oil prices in 2017, we expect a better tone in the CAD to hold towards the turn of the year.”

A plethora of other commodity currencies ticked higher, particularly in Latin America, with the dollar shedding 0.39%, 0.92%, 0.75% and 0.39% against the Mexican, Colombian, Chilean pesos and the Brazilian Real respectively.

Finally, the Australian dollar rose 1.24% against the greenback exchanging at US$0.7264, after data suggested Australia’s real GDP growth was a solid 0.6% quarter-on-quarter in the fourth quarter of 2015, following 1.1% growth - revised up from 0.9% - in the previous quarter. The New Zealand dollar also rose versus its US counterpart notching gains of 0.14% exchanging at US$0.6638.