Pound (GBP) Makes Modest Gains on Covid Optimism
The Pound (GBP) traded in a narrow range yesterday, as a lack of data left Sterling without any clear directional bias.
GBP did manage to make modest gains against some of its rivals, as continued optimism in the UK’s vaccination programme supported the Pound.
This morning’s GDP results could boost the Pound as the day goes on, as UK GDP rose to 4.8% in the second quarter of this year, meeting market expectations.
Euro (EUR) Muted as Markets Digest German CPI
The Euro (EUR) was fairly subdued through yesterday’s session, despite an initial boost from Germany’s CPI, which showed that inflation hit a 28-year high of 3.8% in July.
The surge in inflation was primarily caused by a low base effect due to a temporary VAT cut last year, and therefore failed to offer the single currency lasting support.
Looking ahead, the Eurozone’s industrial production figures later this morning are expected to show another contraction in June, which could dent the Euro.
US Dollar (USD) Dips as US Inflation Peaks
The US Dollar (USD) weakened yesterday, after US inflation met market expectations to hold at a 13-year high, with many analysts suggesting it may have reached its peak.
With inflation seeming to level out, there is less pressure on the Federal Reserve to tighten monetary policy than if prices had continued to rise. This in turn dented the US Dollar, as the Fed will likely continue to wait before tapering bond purchases.
Turning to today, the ‘Greenback’ could find some support later as the most recent initial jobless claims report is expected to show that the US labour market continues to improve.
Canadian Dollar (CAD) Subdued as Oil Prices Waver
The Canadian Dollar (CAD) was muted through yesterday’s session, as wavering oil prices created some uncertainty around the commodity-linked currency.
Oil prices are likely to continue to drive most CAD movement today. Will unsteady oil prices create volatility in the Canadian Dollar?
Australian Dollar (AUD) Trends Lower on Decreased Risk Appetite
The Australian Dollar (AUD) softened overnight after gaining in yesterday’s European session, with a reduced appetite for risk seeing the ‘Aussie’ relinquish some of its gains.
New Zealand Dollar (NZD) Ticks Lower on Cautious Trade
Similarly, the New Zealand Dollar (NZD) was unable to hold on to all of its gains from yesterday’s session, as the ongoing pandemic weighed on the risk-sensitive ‘Kiwi’.