Pound Rangebound as Positive Services PMI Comes with Caveats

Pound (GBP) Muted amid Mixed PMI

The Pound (GBP) wavered in a narrow range yesterday as the UK’s better-than-expected services PMI came with some caveats.

While the pace of expansion in the service sector unexpectedly increased last month, supply chain disruption stifled further growth. In addition, service providers started passing costs on to customers as inflationary pressures began to bite.

Turning to today, the UK’s construction PMI could have an impact on the Pound if it adds to the narrative of the country’s supply chain crisis.

Euro (EUR) Softens amid Service Activity Slowdown

The Euro (EUR) dipped against many of its peers during yesterday’s session as the Eurozone’s services PMI dropped from 59 in August to 56.4 in September.

In addition, the European energy crisis has deepened. Natural gas prices in Europe hit fresh record highs yesterday and concerns grew over the continent’s gas storage levels, which weighed on EUR sentiment.

The single currency may continue to struggle today after German factory orders slumped by 7.7% in August, much worse than the 2.1% contraction that economists expected.

US Dollar (USD) Slips as Market Mood Improves

The US Dollar (USD) lost ground yesterday afternoon as a turnaround in risk appetite dented the appeal of the safe-haven ‘Greenback’.

The bullish tilt among investors came despite concerns over China’s property sector crisis and the unlikely but worrying risk of a US debt default.

Looking ahead, the US ADP employment change figures for September could boost USD this afternoon. Economists expect the report to show that the US private sector hired 428,000 workers last month.

Canadian Dollar (CAD) Climbs as WTI Crude Hits $79 a Barrel

The Canadian Dollar (CAD) firmed against most of its rivals yesterday as WTI crude broke above $79 a barrel, thereby lifting the oil-sensitive currency.

If oil prices continue to rise today then the Canadian Dollar could make further gains.

Australian Dollar (AUD) Dips as Risk Appetite Fades

The Australian Dollar (AUD) slipped in overnight trade as a souring market mood sapped demand for the perceived riskier ‘Aussie’.

New Zealand Dollar (NZD) Falls despite RBNZ Rate Hike

The New Zealand Dollar (NZD) also tumbled overnight amid the bearish shift in sentiment, despite the Reserve Bank of New Zealand (RBNZ) raising its official cash rate from 0.25% to 0.5%.

As investors expected the rate hike, it did little to support the risk-sensitive ‘Kiwi’ amid the downbeat market mood.