Pound (GBP) Slumps as Lockdown Stokes Growth Fears
The Pound (GBP) trended lower at the start of this week’s session as investors reacted to the news that the UK would be re-entering lockdown.
GBP investors were particularly concerned by the prospect of a double-dip recession in the UK, with Goldman Sachs slashing its Q4 growth forecasts from 3.6% to -2.4% in response to the new lockdown.
Lockdown jitters will likely leave the Pound vulnerable to additional losses through today’s session, although any news of positive progress towards a Brexit deal could help to mitigate any losses.
Euro (EUR) Undermined by Coronavirus Concerns
The Euro (EUR) also fell afoul of market coronavirus concerns through Monday’s trading session as Goldman Sachs also sharply cut its Eurozone growth forecast as a result of new lockdown measures announced in France, Germany and other bloc members.
However, the single currency appeared able to limit its losses thanks to the publication of Germany’s finalised manufacturing PMI release from October as it revealed German factory activity surged to a new two-year high.
In the absence of any notable EUR data today, it’s likely the Euro will continue to be driven by coronavirus developments, with more losses on the cards if there are signals of more countries re-imposing lockdowns.
US Dollar (USD) Firms as Risk Aversion Grows
The US Dollar (USD) kept advancing against its peers yesterday, with demand for the safe-haven currency being underpinned in large part by global coronavirus concerns as well as US political uncertainty.
While a modest rebound in equity markets helped to cap the US Dollar’s gains through the second half of the European session, a sharp jump in the ISM manufacturing PMI ensured the ‘Greenback’ remained well supported.
The spotlight today will be on the US presidential election, where the risk of contested result threatens to throw up significant uncertainty and feed into the US Dollar’s safe-haven appeal.
Canadian Dollar (CAD) Rally Defies Oil Slump
The Canadian Dollar (CAD) ticked higher on Monday, with the oil-sensitive ‘Loonie’ finding support in spite of crude prices slipping to a new five-month low amid concerns of depressed demand.
Australian Dollar (AUD) Unmoved Despite RBA Rate Cut
The Australian Dollar (AUD) remained in a narrow range overnight on Monday, with AUD investors being largely unfazed by the Reserve Bank of Australia’s (RBA) decision to cut interest rates to a record low of 0.10% as the move was already priced in.
New Zealand Dollar (NZD) Muted in Wary Trade
The New Zealand Dollar (NZD) was mostly rangebound in overnight trade as investors were reluctant to make any bets on the risk-sensitive currency ahead of the US election.
Coming up, we may see the ‘Kiwi’ fall back later this evening as New Zealand’s latest labour report is expected to reveal a sharp jump in unemployment in the third quarter.