Trading The RBNZ Rate Decision

Although U.S. data was weaker than expected and Treasury yields declined on Tuesday, the U.S. dollar was steady or higher against all of the major currencies with the exception of the euro. The single currency outperformed on the back of stronger German business confidence. The German IFO business climate index climbed to 99.2 from 96.6 with improvements seen in current conditions and expectations. The infection rate is dropping, some states are easing restrictions and according to the country’s health minister by the end of this month, about 40 percent of the entire population will have received at least one shot. The uptick in business confidence reflects optimism about Germany and the global recovery.

Sterling pulled back following a weaker CBI Distributive Trades survey. This report measuring consumer spending suggests that after a strong April, demand is returning back to normal levels. Meanwhile, a decline in manufacturing sales drove the Canadian dollar lower against the greenback. USD/CAD has been trading in a tight range above 1.20 and the longer it spends at this level, the greater the chance of a short squeeze.

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