Pound Recovers from Post-CPI Slump

Pound (GBP) Rebounds after CPI Miss

The Pound (GBP) initially slipped yesterday morning after the UK’s CPI printed below expectations, reducing the chances of a rate hike at the Bank of England’s (BoE) next policy meeting in two weeks’ time.

However, this downside seems to have been a temporary blip, as Sterling rebounded strongly in the afternoon, posting gains against most of its major rivals.

Turning to today, the latest data from the Confederation of British Industry could put some pressure on the Pound. Both industrial trends orders and business confidence are forecast to fall, with the latter likely to have a bigger impact.

Euro (EUR) Dips amid Lack of Data

The Euro (EUR) weakened against most of its peers yesterday as a lack of market-moving Eurozone data left the single currency vulnerable to losses.

EUR also continued to be pressured by the European Central Bank’s (ECB) dovish stance, with ECB policymakers playing down the Eurozone’s high inflation rate.

This afternoon’s flash consumer confidence report for the Eurozone may impact EUR exchange rates, with consumer morale expected to slip from -4 to -5.

US Dollar (USD) Stumbles amid Risk-On Trade

The US Dollar (USD) suffered a heavy sell-off yesterday afternoon, as investors abandoned the safe-haven currency for riskier assets amid an upbeat market mood.

The bearish sentiment came following positive developments this month, including signs that the US economic recovery is strong, Australia easing lockdown restrictions and global Covid cases declining.

Looking ahead, a turn in the market mood could support the US Dollar today, as renewed concerns around the Evergrande crisis cause markets to cloud over.

Canadian Dollar (CAD) Mixed on Volatile Oil Prices

The Canadian Dollar (CAD) had a mixed day yesterday as oil prices fell steadily throughout the first part of the session.

The ‘Loonie’ was able to gain on its weaker rivals in the afternoon, boosted by a rebound in crude and Canada’s above-expected inflation rate.

This afternoon’s employment change figures are forecast to show a continued recovery in Canada’s labour market, which could boost CAD.

Australian Dollar (AUD) Falls amid Risk-Off Trade

The Australian Dollar (AUD) dipped overnight as a bearish market mood weighed on the risk-sensitive ‘Aussie’.

New Zealand Dollar (NZD) Slips as Market Sentiment Sours

The New Zealand Dollar (NZD) also lost ground during the overnight session, as a gloomy market mood drained the appeal of the riskier ‘Kiwi’.

Samuel Birnie

Contact Samuel Birnie