Pound (GBP) Fluctuates as Political Uncertainty Continues
The Pound (GBP) wavered yesterday, edging higher overall, as political turbulence kept GBP investors rather jumpy.
The UK’s public sector borrowing figures in the morning helped lift GBP. Government borrowing came in lower than expected, prompting cautious optimism around the state of the UK economy.
A lack of UK data today could leave the Pound to be primarily influenced by political news. The country is awaiting the findings of Sue Gray’s inquiry, which may be published later today.
Euro (EUR) Falls amid USD Strength
The Euro (EUR) slipped during yesterday’s session as the single currency suffered from its negative correlation to a stronger US Dollar (USD) ahead of the Federal Reserve’s interest rate decision.
Germany’s better-than-expected business climate report failed to support the Euro. Despite an improvement in morale, economists still expect Europe’s largest economy to have slipped into recession in the last quarter of 2021.
EUR investors may be reluctant to place any aggressive bets today with the Fed decision looming. As a result, we may see limited movement in the Euro.
US Dollar (USD) Steady ahead of Fed Decision
The US Dollar (USD) held steady during yesterday’s session as continuing geopolitical tensions on the Russia-Ukraine border kept the safe-haven US Dollar in demand.
The ‘Greenback’ lacked upside conviction, however, with USD investors perhaps hesitant ahead of the Fed’s policy meeting tonight.
With the US central bank due to make an announcement this evening, we could see the US Dollar remain quiet through today’s session. Activity may then pick up during the US forex session, with the potential for some big movements following the Fed decision.
Canadian Dollar (CAD) Edges Higher on Oil Prices and BoC Expectations
The commodity-linked Canadian Dollar (CAD) had some limited success during yesterday’s session. Oil prices wavered slightly higher and CAD investors seemed reluctant to sell ahead of the Bank of Canada’s (BoC) rate decision today.
Markets have priced in a 65% chance that the BoC will hike rates today. With such a degree of uncertainty, we could witness some sharp movement. A hike would likely boost CAD while no change might see it slip.
Australian Dollar (AUD) Flat on Mixed Market Mood
The Australian Dollar (AUD) traded in a narrow range overnight amid a mixed market mood, and with the Fed decision this evening causing hesitancy among investors.
New Zealand Dollar (NZD) Rangebound amid Tentative Trade
The New Zealand Dollar (NZD) also moved mostly sideways in overnight trade as investors exercised caution ahead of the Fed policy announcement.