GBP Mixed after Upwardly Revised Services PMI, Pound to US Dollar Strengthens
GBP exchange rates traded in a mixed range yesterday, with the Pound to US Dollar gaining strongly to a three-week high, while the Pound to Euro remained rangebound.
Pound exchange rates failed to find much traction despite an upward revision to September’s services PMI that indicated stronger growth. However, Pound gains were capped as the surveys also highlighted increasing job losses, while the UK government’s launch of a scheme yesterday aimed at getting those jobless due to Covd-19 back to work also failed to boost GBP.
Looking ahead, Brexit will continue to be a key focus for GBP investors as they await signs of progress. Meanwhile, September’s construction PMI could add support to the Pound if it stays in solid growth territory.
Euro (EUR) Rallies after Strong Retail Sales Figures
The Euro (EUR) strengthened yesterday following stronger-than-expected Eurozone retail sales figures for August.
Retail spending rebounded impressively from July’s of -1.8%, rising to 4.4% on the month in August and stronger than the expected 2.4%. Added to this, EUR exchange rates benefitted from improving market sentiment and its negative correlation to USD, particularly boosting the Euro to US Dollar exchange rate.
The key focus for EUR investors today is the speech from European Central Bank President Christine Lagarde, where she could hint at further monetary easing and address Eurozone deflation.
The Euro may find some support ahead of Lagarde’s speech as German factory orders revealed stronger-than-expected growth in August, and up on the previous month.
US Dollar (USD) Falls on Improved Risk Appetite as Trump Leaves Hospital
The US Dollar (USD) tumbled across the board yesterday following risk-on trade as markets responded to Donald Trump leaving hospital for Covid-19 treatment.
The US Dollar gave up the gains it had made from safe-haven demand as market sentiment improved on news that Trump appears to be recovering well. This offset the strong ISM Non-manufacturing PMI for September that indicated robust growth in September.
Turning to today’s session, the US Dollar will stay sensitive to headlines over Trump’s recovery and the ongoing coronavirus stimulus package talks. However, USD investors will also focus on the latest JOLTs job opening figures and a speech by Federal Reserve Chair Jerome Powell.
Canadian Dollar (CAD) Supported by Oil Price Boost
The Canadian Dollar (CAD) benefitted from a surge in oil prices yesterday as WTI crude climbed back to $39 a barrel.
Looking ahead, Canada’s trade balance figures later today could drive some movement in CAD exchange rates later, with an improvement on the previous month expected.
Australian Dollar (AUD) Slides as RBA Hints at Further Monetary Easing
The Australian Dollar (AUD) fell sharply in overnight trade on expectations the Reserve Bank of Australia (RBA) will introduce further monetary easing to support jobs.
Looking ahead, the Australian government’s federal budget later could drive movement in AUD exchange rates as it is expected to up spending to stimulate growth.
New Zealand Dollar (NZD) Slips despite Improved Market Sentiment
The New Zealand Dollar (NZD) also trended lower in overnight trade as investors remain wary of monetary easing from the Reserve Bank of New Zealand (RBNZ), which capped the risk-sensitive New Zealand Dollar making gains in upbeat trade.