Euro (EUR) Declines as Recession Risks Grow
The Euro (EUR) slumped yesterday, hitting a 20-year low against the US Dollar (USD) as fears of a European recession weighed heavily on EUR.
The single currency did manage to recoup some of its losses in the afternoon, with EUR seemingly entering oversold conditions. However, overall the Euro remained down on the day.
An expected recovery in Eurozone retail sales may support the single currency later this morning. However, if recession fears remain then EUR may stumble regardless.
Pound (GBP) Slides following BoE Warnings
The Pound (GBP) experienced some volatility yesterday. Initially, GBP rose against some of its weaker peers after the UK’s final services PMI showed an unexpected improvement.
However, Sterling slumped following the Bank of England’s (BoE) Financial Stability Report. In the report, the BoE warned that the UK’s economic outlook has ‘deteriorated materially’ and highlighted a number of risks facing the country’s financial system.
Political uncertainty could impact the Pound today following two cabinet ministers’ resignations last night. In addition, we have a number of BoE policymakers delivering speeches. If they voice concerns about the UK economy, Pound Sterling could struggle.
US Dollar (USD) Surges to 20-Year High
The US Dollar soared yesterday, with the US Dollar Index hitting a 20-year high.
The strong upside came as recession fears weighed heavily on global markets, with investors flocking to the safe-haven ‘Greenback’. In addition, stronger-than-expected US factory orders may have added to the upside.
Today’s session brings a number of potentially high-impact events, including a speech from Federal Reserve policymaker John Williams, the ISM services PMI, and the minutes from the Fed’s June meeting. We could see some more big movements in USD.
Canadian Dollar (CAD) Dragged Down by Falling Oil Prices
After initially ticking higher yesterday, the crude-linked Canadian Dollar (CAD) declined amid a slump in oil prices.
Looking ahead, movements in the oil market could continue to drive the ‘Loonie’. Could crude prices recover?
Australian Dollar (AUD) Mixed amid Downbeat Mood and Stronger Commodities
The risk- and resource-linked Australian Dollar (AUD) wavered overnight as a rise in key commodity prices offset a gloomy market mood.
New Zealand Dollar (NZD) Wobbles alongside AUD
The New Zealand Dollar (NZD) also fluctuated in overnight trade as the ‘Kiwi’ traded true to its positive correlation with the Australian Dollar.