Pound (GBP) Mounts Tentative Recovery
The Pound (GBP) staged a recovery through yesterday’s European trading session as opposition to Boris Johnson’s controversial internal market bill grew.
However, despite this opposition, the bill still cleared the first parliamentary hurdle.This failed to quash Sterling’s gains as observers suggest the bill is likely to face more challenges when MPs are allowed to table amendments next week.
While Brexit is likely to remain the main focus for markets today, GBP exchange rates may also be influenced by this morning’s jobs report, with disappointing unemployment and wage growth figures for July likely to exert some pressure on the Pound.
Euro (EUR) Buoyed by Upbeat Industrial Data
The Euro (EUR) edged higher on Monday, propped up by a slightly stronger-than-expected expansion of Eurozone industrial production in July.
However the upside in EUR exchange rates was tempered somewhat by rising concerns over Europe’s coronavirus resurgence as the World Health Organization (WHO) issued a stark warning that the situation is likely to deteriorate through October and November.
The latest ZEW surveys from Germany will be in the spotlight today. Will a potential deterioration in economic sentiment drag on the Euro?
US Dollar (USD) Retreats in Risk-On Trade
The US Dollar (USD) opened this week on the back foot, retreating through the majority of yesterday’s trading session as renewed optimism for a coronavirus vaccine bolstered market sentiment and limited the appeal of the safe-haven ‘Greenback’.
Also weighing on USD exchange rates was growing pessimism that Democrats and Republicans will be able to reach any kind of deal regarding another round of coronavirus stimulus, particularly ahead of a highly contentious election.
There may be scope for the US Dollar to claw back some of these losses later today if US industrial production prints robustly in August.
Canadian Dollar (CAD) Muted as Oil Consolidates Losses
The Canadian Dollar (CAD) was mostly flat through Monday’s trading session, with demand for the commodity-linked ‘Loonie’ limited as WTI oil remained in a confined range at just $37 a barrel.
Australian Dollar (AUD) Buoyed by RBA Minutes
The Australian Dollar (AUD) strengthened overnight on Monday, bolstered by a risk-on tone as well as the minutes from the Reserve Bank of Australia’s (RBA) September policy meeting. The minutes suggested Australia’s economic downturn has not been as severe as initially expected.
New Zealand Dollar (NZD) Strengthens on Upbeat Chinese Data
The New Zealand Dollar (NZD) also tracked higher in overnight trade, with the appeal of the ‘Kiwi’ strengthened by some above-forecast industrial data from China.