US Dollar Rises on Possibility of a 1% Fed Rate Rise

US Dollar (USD) Climbs on Rate Rise Bets and Risk-Off Mood

The US Dollar (USD) strengthened yesterday as Wednesday’s hot inflation rate reading continued to fuel Federal Reserve rate rise bets, particularly after the Bank of Canada’s (BoC) 100-bp hike.

In addition, a risk-off mood boosted the safe-haven currency’s appeal. Markets are becoming increasingly convinced that a global recession is inevitable.

Today’s US retail sales and consumer sentiment could be particularly impactful. If they show strong results, markets may start pricing in a 1% rate rise at the Fed’s next meeting. Weaker readings, on the other hand, could dampen rate hike bets.

Pound (GBP) Directionless amid Lack of Data

The Pound (GBP) was mixed yesterday as a lack of UK economic data left GBP to trade primarily on movements in other currencies.

Meanwhile, ongoing political uncertainty in the UK added to Sterling’s lack of direction. With the Conservative Party seeking to elect a new leader, and a new UK Prime Minister, GBP investors are holding back from aggressive trading.

With no UK data due out today, Sterling may once again struggle for a clear direction.

Euro (EUR) Enjoys Respite as Energy Prices Soften

The Euro (EUR) managed to make some gains against its weaker peers yesterday, despite Eurozone recession fears continuing to hang over the single currency.

EUR’s initial gains seem to have been driven by movements in other currencies. In the afternoon, however, a drop in gas and oil prices helped alleviate some of the pressure on the Euro.

The Eurozone balance of trade figures for May could cause some EUR movement this morning. Could the bloc’s trade deficit continue to widen?

Canadian Dollar (CAD) Dives as Oil Prices Fall

The commodity-tied Canadian Dollar (CAD) tumbled yesterday as oil prices continued their recent decline. WTI crude fell almost 3% over the course of the day, dragging CAD down with it.

With no notable Canadian data due out today, crude prices could continue to drive movement in the ‘Loonie’.

Australian Dollar (AUD) Falls as Chinese GDP Disappoints

The China-proxy Australian Dollar (AUD) faced selling pressure overnight as the latest Chinese GDP data revealed a larger-than-forecast downturn.

New Zealand Dollar (NZD) Rangebound despite Poor PMI

The risk-sensitive New Zealand Dollar (NZD) wavered overnight, trading sideways despite the latest business PMI showing a fall in activity in June.

Samuel Birnie

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