Pound (GBP) Dips as BoE-Driven Losses Persist
The Pound (GBP) continued to slide on Friday as the Bank of England’s (BoE) decision to leave interest rates unchanged drove Sterling’s lower, although its losses were capped after an improvement in market sentiment later in the day.
Sterling has come under further pressure following reports that the UK could trigger Article 16 of the Northern Ireland protocol as UK-EU talks remain deadlocked, sparking fears over a breakdown in the trade deal between the two.
Looking ahead, the Pound looks set to remain sensitive to the ongoing UK-EU talks and comments from BoE policymakers ahead of the UK’s third quarter GDP, which is expected to slow to 1.5%, down from 5.5% in the second quarter.
Euro (EUR) Steady as Eurozone Data Disappoints
The Euro (EUR) ended Friday’s session at the same level it started the day after fluctuating through the day, receiving support from its negative correlation with a wavering US dollar.
EUR exchange rates had come under pressure after German industrial production unexpectedly contracted for a second consecutive month in September, and Eurozone retail sales also surprised by contracting -0.3%.
The ZEW economic sentiment surveys for November may weigh on the single currency tomorrow, with forecasts pointing to another decline in business morale for the sixth consecutive month in Germany and the Eurozone.
US Dollar (USD) Fluctuates as Non-Farm Payrolls Impress
The US Dollar (USD) traded in a wide range at the end of last week, gaining sharply in the first part of Friday’s session.
Demand for the safe-haven ‘Greenback’ weakened later in the session after a better-than-expected non-farm payrolls of 531,000 for October, up from an upwardly revised 312,000 in September, lifted market mood. News that Pfizer’s antiviral Covid-19 pill reduces deaths and hospitalisations by 90% further bolstered risk-on trade.
US inflation released on Wednesday will be the focus for USD investors this week, with forecasts pointing to inflation having risen to 5.8% in October potentially stoking some volatility in the US Dollar.
Canadian Dollar (CAD) Buoyed by Falling Unemployment Rate
The Canadian Dollar (CAD) strengthened on Friday after the Canadian unemployment rate surprised by dropping more-than expected to 6.7% in October, down from 6.9% in September, declining for a fifth straight month.
Australian Dollar (AUD) Bolstered by Chinese Trade Data
The Australian Dollar (AUD) ticked higher overnight after a risk-on mood – bolstered by China’s trade surplus surging to a record high – offered support to the risk-sensitive ‘Aussie’.
New Zealand Dollar (NZD) Strengthens amid Risk-On Mood
Risk-on trade also supported the New Zealand Dollar (NZD) at the start of this week due to China’s upbeat trade data.