Pound Climbs on Expectations of a 0.5% BoE Rate Rise

Pound (GBP) Firms as Traders Expect 50-bp Rate Rise

The Pound (GBP) strengthened against many of its peers yesterday as Bank of England (BoE) rate rise bets boosted Sterling.

Markets now believe there’s a 70% chance of a 50-basis-point rate rise at the bank’s meeting on Thursday.

With UK data thin on the ground today, movement in Sterling may be muted.

Euro (EUR) Wobbles amid Mixed Trading Signals

The Euro (EUR) was mixed yesterday, experiencing some volatility and struggling for a clear direction.

A large, unexpected decline in German retail sales and a contraction in Eurozone manufacturing activity weighed on EUR. On the other hand, an initially upbeat market mood helped the single currency, as did the Eurozone’s latest unemployment rate, which held at a record low.

Amid a lack of Eurozone data today, EUR exchange rates may once again trade without a clear trajectory.

US Dollar (USD) Falls amid Risk-On Trade

The US Dollar (USD) initially fell yesterday as a surprisingly upbeat market mood drained demand for the safe-haven ‘Greenback’.

The ISM manufacturing PMI failed to support USD exchange rates in the afternoon. Despite printing above forecasts, factory activity still fell to a fresh two-year low.

Today, economists expect the latest JOLTs job openings data to show that the labour market remains tight, which could support USD. At the same time, a speech from Federal Reserve policymaker Charles Evans could cause some movement.

Canadian Dollar (CAD) Dragged Down by Weaker Oil Prices

The Canadian Dollar (CAD) weakened yesterday as declining crude prices weighed on the oil-sensitive ‘Loonie’.

The headwinds could persist today as economists expect Canada’s latest manufacturing PMI to reveal a slowdown in factory growth.

Australian Dollar (AUD) Falls following RBA Hike

The Australian Dollar (AUD) slumped following the Reserve Bank of Australia (RBA) interest rate decision earlier this morning. Although the RBA raised rates by 0.5%, as expected, a cautious accompanying statement led markets to pare back bets for future rate hikes.

New Zealand Dollar (NZD) Down as Sentiment Sours

The New Zealand Dollar (NZD) also fell sharply this morning due to its positive correlation with the ‘Aussie’ Dollar and a risk-off market mood.

Samuel Birnie

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