Pound (GBP) Climbs following Strong Services PMI
The Pound (GBP) rallied yesterday after the UK’s services PMI beat expectations, indicating a strong recovery in the country’s service sector, which accounts for nearly 80% of GDP.
This in turn fuelled rate hike expectations ahead of the Bank of England’s (BoE) knife-edge interest rate decision today.
All eyes are on the BoE, with the central bank set to announce its decision at noon. GBP could surge or slide, depending on whether or not the BoE raises rates.
Euro (EUR) Muted ahead of Fed Decision
The Euro (EUR) was fairly subdued yesterday as EUR investors refrained from placing any aggressive bets ahead of the Federal Reserve’s interest rate decision.
However, the latest Eurozone jobless rate buoyed the Euro and prevented too deep a downside. Euro area unemployment fell from 7.5% to 7.4% in September, in line with market expectations.
The single currency could struggle today due to a smaller-than-expected recovery in German factory orders and EUR’s negative correlation to a stronger US Dollar (USD).
US Dollar (USD) Quiet as Investors Await Fed Policy
The US Dollar was mixed through yesterday’s session, with USD investors quiet ahead of the Fed’s decision, despite some strong US data.
In the evening, the Fed announced that it will begin tapering its $120bn bond-purchasing package by $15bn a month, as markets expected. But with regards to an interest rate rise, Fed Chair Jerome Powell said the bank could be patient.
This morning, the US Dollar is trending higher as it recovers from the mild disappointment of Powell’s comments. A forecast contraction in non-farm productivity later today may undermine USD.
Canadian Dollar (CAD) Mixed on Falling Oil and OPEC+ Expectations
The Canadian Dollar (CAD) struggled for a clear direction yesterday amid falling oil prices and ahead of today’s OPEC+ meeting, where the oil cartel will likely ignore world leaders’ calls for increased production.
These expectations have triggered a rally in WTI crude today, which in turn could support the oil-linked ‘Loonie’ throughout the session.
Australian Dollar (AUD) Dips on Drop in Exports
The Australian Dollar (AUD) softened overnight after Australia’s trade surplus narrowed for the first time in six months due to a 6% drop in exports.
New Zealand Dollar (NZD) Slips amid Risk-Off Trade
The New Zealand Dollar (NZD) also fell against most of its rivals in overnight trade as a souring of market sentiment sapped demand for the riskier ‘Kiwi’.