Pound (GBP) Declines on Dovish BoE Comments
The Pound (GBP) slid during yesterday’s session as investors remain worried about the UK’s economic outlook.
In addition, dovish comments from two Bank of England (BoE) officials dented GBP. Swati Dhingra, who will join the bank’s Monetary Policy Committee (MPC) in August, argued that there was ‘room for a very gradual approach’ to raising rates. Meanwhile, BoE Governor Bailey suggested that the UK economy was already cooling, further dampening GBP’s appeal.
This morning, the UK’s final GDP report revealed a larger-than-forecast fall in business investment. This could put some pressure on the Pound.
Euro (EUR) Stumbles on Softer German Inflation
After initially ticking higher yesterday, the Euro (EUR) eventually turned south as markets responded to comments from European Central Bank (ECB) President Christine Lagarde and inflation data out of the Eurozone.
Ahead of the Eurozone flash inflation release on Friday, inflation in Spain jumped a whopping 1.2 percentage points. However, prices pressures eased in Germany, showing a mixed picture. Meanwhile, Lagarde said the ECB would be data-driven. EUR investors seemed unimpressed with the ECB chief’s cautious commentary.
Turning to today, the latest Eurozone unemployment rate could impact EUR. Economists expect it to hold at 6.8%. Could we be in for a surprise?
US Dollar (USD) Firms on Hawkish Fed Remarks
The US Dollar (USD) strengthened yesterday amid hawkish comments from Federal Reserve Chair Jerome Powell.
The Fed chief indicated that he was far more concerned about rising inflation than slowing growth, suggesting that the US economy was strong enough to weather rate rises. This signal that the Fed would continue tightening policy boosted USD.
Looking ahead, the Fed’s preferred measure of inflation – the core PCE price index – is due out today. Will easing inflation dampen rate rise bets?
Canadian Dollar (CAD) Ticks Higher as Oil Rises
The commodity-linked Canadian Dollar (CAD) rose yesterday morning as oil prices climbed, but pared its gains as crude slipped in the afternoon.
This afternoon, Canada’s latest GDP figures could cause some movement. Will a slowdown in growth weigh on CAD exchange rates?
Australian Dollar (AUD) Mixed amid China PMIs
The Australian Dollar (AUD) fluctuated overnight. A downbeat market mood weighed on the risk-sensitive currency, but a return to growth in China’s latest PMI surveys offset the downside.
New Zealand Dollar (NZD) Softens as Business Confidence Slips
The New Zealand Dollar (NZD) wavered lower in overnight trade as a larger-than-forecast drop in business confidence and a cautious tone among investors dampened demand for the ‘Kiwi’.