Pound Recovers after Post-Inflation Fall

Pound (GBP) Rebounds from Post-CPI Slump

The Pound (GBP) initially slipped yesterday after the UK’s latest inflation rate reading dampened Bank of England (BoE) rate hike bets.

However, Sterling shook off the downside pressure and managed to recover its losses against the majority of its peers, without a clear catalyst for the movement.

Today, the UK’s flash PMIs are in the spotlight. Will the cost-of-living crisis have caused another sharp slowdown in business activity?

Euro (EUR) Firms as Eurozone ‘Far’ from Stagflation

The Euro (EUR) strengthened yesterday as researchers from the European Central Bank (ECB) said ‘expert forecasts remain far from a stagflation scenario’, alleviating some concern about the Eurozone economy.

A decline in the US Dollar (USD) also helped the single currency. As EUR is negatively correlated to USD, weakness in the latter often boosts the former.

As with the Pound, PMIs are the focus today for EUR investors. Any surprise results could cause significant movement.

US Dollar (USD) Dips amid US Recession Concerns

The US Dollar fell yesterday, despite a downbeat market mood, as a decline in US Treasury yields dragged the ‘Greenback’ lower.

US recession fears also weighed on USD. Testifying before the US Senate, Federal Reserve Chair Jerome Powell conceded that aggressive rate rises could tip the economy into a recession.

Although not as impactful as the ISM releases, today’s US PMIs could cause some movement. USD investors will also be attentive to Powell’s second congressional testimony this afternoon. Any more worrying remarks could hurt the US Dollar.

Canadian Dollar (CAD) Slips despite Hot Inflation Figures

The Canadian Dollar (CAD) softened yesterday, despite hotter-than-forecast inflation figures increasing expectations of hawkish action from the Bank of Canada (BoC).

The downside came following an overnight slump in oil prices. WTI crude was down nearly 3.5% on the day, dragging the commodity-linked ‘Loonie’ with it.

With no Canadian data out today, oil market movements may continue to drive CAD exchange rates.

Australian Dollar (AUD) Hits Monthly Lows as Commodities Fall

The Australian Dollar (AUD) declined to monthly lows against some of its peers overnight. The downside came despite a rally in Asian markets as weaker commodities prices weighed on the resource-linked ‘Aussie’.

New Zealand Dollar (NZD) Dented by Weaker Commodities Market

Likewise, the New Zealand Dollar (NZD) slipped in overnight trade as the pullback in materials prices also hurt the commodity-tied ‘Kiwi’. However, NZD recouped much of its losses as European trade began.

Samuel Birnie

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