Euro Hits Monthly Highs against the Pound and US Dollar on Fall in Eurozone Unemployment

Pound (GBP) Dented by Downbeat Manufacturing PMI 

The Pound (GBP) struggled in yesterday’s session, after the UK’s finalised manufacturing PMI confirmed a slowdown in UK factory activity. 

Despite being revised marginally higher, the PMI pointed to ongoing supply chain disruption and staff shortages caused by both Brexit and rising coronavirus cases. This added to recent worries about the UK’s economic recovery, thereby denting GBP. 

Turning to today, an absence of UK data releases could leave Sterling vulnerable to losses. 

Euro (EUR) Climbs on Fall in Unemployment 

The Euro (EUR) firmed through yesterday’s session as the Eurozone’s unemployment rate dropped from 7.8% in June to 7.6% in July. 

This raised investors’ hopes of a more hawkish approach to monetary policy from the European Central Bank (ECB) following the above-expected CPI release on Tuesday, adding to EUR’s upside. 

With no major market-moving data out of the Eurozone today, the single currency could be driven by its negative correlation to the US Dollar (USD) and predictions on the outcome of the ECB’s meeting next week. 

US Dollar (USD) Dips on Jobs Data Miss 

The US Dollar (USD) was weakened yesterday by falling US Treasury yields and some disappointing jobs data. 

The ADP employment change revealed that the US private sector hired 374,000 new workers in August, well below predictions of a 613,000 increase. USD investors were unimpressed by the figures, causing the ‘Greenback’ to slip.

Looking ahead, this afternoon’s data releases from the US are forecast to be rather tepid. Any unexpected results from the initial jobless claims or factory orders could trigger movement in USD. 

Canadian Dollar (CAD) Undermined by Drop in Oil Prices 

The commodity-linked Canadian Dollar (CAD) fell yesterday, despite the Canadian manufacturing PMI printing above expectations, as oil prices slipped by $1.50. 

If oil prices remain subdued, CAD could struggle today. Meanwhile, Canada’s trade surplus is expected to narrow by more than half, which could also dent the ‘Loonie’. 

Australian Dollar (AUD) Gains on Balance of Trade Figures 

The Australian Dollar (AUD) strengthened overnight, buoyed by a bullish market sentiment and an unexpected widening of Australia’s trade surplus. 

New Zealand Dollar (NZD) Firms amid Risk-On Mood 

The New Zealand Dollar (NZD) ticked higher in overnight trade as an upbeat market mood increased the appeal of the risk-sensitive ‘Kiwi’.