Pound (GBP) Subdued on Unsurprising PMI
The Pound (GBP) trended lower yesterday, as the UK’s final manufacturing PMI matched the preliminary estimates, therefore not prompting much movement.
While the PMI showed continued growth in factory output, concerns over rising costs, labour shortages and strained supply chains offset the upbeat outlook.
With data still thin on the ground, the Pound may struggle for direction again today, particualrly ahead of the Bank of England’s (BoE) upcoming interest rate decision.
Euro (EUR) Firms on Positive PMIs
The Euro (EUR) firmed against many of its rivals yesterday after German retail sales smashed forecasts and the Eurozone’s final manufacturing PMI was revised higher.
The PMI revealed the twelfth successive month of expansion in the Eurozone’s factory output, coming in just below last month’s record high.
Despite the strong results, the Euro was only able to make modest gains.
With no notable data from the Eurozone today, the Euro could be extra sensitive to its negative correlation with the US Dollar (USD).
US Dollar (USD) Dented by Lacklustre PMI
The US Dollar had a mixed session yesterday, as a risk-on market mood and below-expected PMI weighed on the safe-haven currency.
The ‘Greenback’ did, however, manage to gain on some weaker currencies, with no clear catalyst for the upside.
Today’s factory orders and economic optimism reports are in focus for USD investors today. With both expected to drop, could the US Dollar face some headwinds?
Canadian Dollar (CAD) Dented as Oil Prices Drop
The Canadian Dollar (CAD) fell yesterday after a $2 slump in oil prices hit the commodity-linked currency, potentially caused by renewed travel restrictions across China as local governments fight to contain the Delta variant.
If oil prices remain subdued, CAD may struggle today. Though it may find modest support from Canada’s manufacturing PMI this afternoon, which is set to improve.
Australian Dollar (AUD) Soars as RBA Begins Tapering
The Australian Dollar (AUD) jumped overnight, after the Reserve Bank of Australia (RBA) went ahead with plans to begin tapering bond purchases.
The decision came despite many economists expecting the RBA to postpone tapering in light of the recent Covid outbreaks in Australia.
New Zealand Dollar (NZD) Gains on AUD Strength
The New Zealand Dollar (NZD) also strengthened in overnight trade, boosted by its positive correlation with the Australian Dollar.