Pound (GBP) Firms on BoE Bailey Remarks
The Pound (GBP) posted modest gains yesterday after Bank of England (BoE) Governor Andrew Bailey said that the bank is prepared to raise interest rates again to tackle rising inflation.
However, these hawkish comments were tempered with warnings that households are facing a further squeeze on incomes. Additional rate rises could add to the economic pain.
Today, the UK’s flash PMIs are in focus. With the UK economy in a fragile position, any surprise results could cause significant movement.
Euro (EUR) Leaps as Lagarde Signals Rate Hikes
The Euro (EUR) jumped higher yesterday morning after European Central Bank (ECB) President Christine Lagarde set out expectations that the ECB would hike rates in July and September.
An unexpected rise in German business confidence also boosted the single currency. Germany’s Ifo business climate indicator inched up to a three-month high as worries about a recession begin to ease.
The ECB’s hawkish tilt seems to be providing further tailwinds today, despite the Eurozone PMIs missing forecasts.
US Dollar (USD) Wallows near Two-Week Lows
The US Dollar (USD) struggled yesterday as a risk-on mood subdued demand for the safe-haven currency.
However, Federal Reserve rate hike bets continue to underpin the ‘Greenback’, preventing further losses.
Although not as influential as the ISM surveys, today’s US PMIs could impact the US Dollar. After last week’s jitters over the US economy, USD investors may be particularly sensitive to any troubling signs.
Canadian Dollar (CAD) Slips as Oil Prices Edge Lower
The oil-linked Canadian Dollar (CAD) wobbled lower yesterday as crude prices softened.
Movements in the oil market may continue to drive the ‘Loonie’ today as Canadian economic data is thin on the ground.
Australian Dollar (AUD) Ticks Lower as Markets Cloud Over
The Australian Dollar (AUD) fell overnight as global risk sentiment soured, thereby dampening the appeal of the risk-sensitive ‘Aussie’.
New Zealand Dollar (NZD) Softens amid Risk Aversion
The perceived-riskier New Zealand Dollar (NZD) also declined in overnight trade due to the bearish market mood.