Pound (GBP) Wobbles as Business Investment Declines
The Pound (GBP) initially dipped yesterday as a downward revision to the UK’s final business investment figures put some pressure on Sterling.
However, GBP exchange rates bounced back in the afternoon without a clear catalyst for the movement. Overall, Sterling traded sideways.
This morning, the latest lending data could cause some movement in the Pound, particularly if it highlights how households are struggling amid the current income crunch. Otherwise, risk appetite and domestic news could drive GBP.
Euro (EUR) Bounces as ECB Unveils Anti-Fragmentation Tool
The Euro (EUR) slid to two-week lows yesterday as investors worried that the Eurozone could be heading towards a second debt crisis. As the European Central Bank (ECB) prepares to raise interest rates, borrowing costs across different Euro area countries have diverged.
However, news of one of the ECB’s anti-fragmentation tools helped sooth investors. To limit yield spreads, the ECB will buy bonds from debt-stressed countries using proceeds from debt in more stable Eurozone economies.
During today’s trade, the Eurozone inflation rate is the key release for EUR investors. Markets predict that inflation will hit a fresh record high of 8.4%. This could boost the Euro by raising expectations of more hawkish action from the ECB.
US Dollar (USD) Sheds Gains as Inflation Misses Forecasts
The US Dollar (USD) ticked higher at the start of yesterday’s session as a gloomy market mood increased the appeal of the safe-haven currency.
However, softer-than-expected US inflation saw the ‘Greenback’ reverse the upside. If inflationary pressures ease, the Federal Reserve may not raise interest rates as high as previously anticipated.
Turning to today, forecasters expect the US ISM manufacturing PMI to show a decrease in business activity. Could signs of a slowdown hurt USD?
Canadian Dollar (CAD) Wobbles amid Downbeat GDP Data
The Canadian Dollar (CAD) wavered yesterday amid some disappointing GDP figures. While GDP in April printed true to forecasts at 0.3%, May’s preliminary report showed an unexpected 0.2% contraction.
With Canadian data thin on the ground today, movements in the oil market could drive the commodity-tied ‘Loonie’.
Australian Dollar (AUD) Plunges amid Risk Aversion
The risk-sensitive Australian Dollar (AUD) nosedived last night as a gloomy mood swept markets, despite upbeat PMI data from Australia and China.
New Zealand Dollar (NZD) Plummets as Sentiment Sours
Likewise, the New Zealand Dollar (NZD) slumped in overnight trade as the bearish mood sapped demand for the riskier ‘Kiwi’.