Pound (GBP) Subdued on Energy Cap Increase
The Pound (GBP) found itself under pressure at the end of last week after Ofgem announced the expected 80% hike in the energy price cap, raising fears over the UK’s cost-of-living crisis.
Sterling was able to regain ground against some of its weaker rivals later on, perhaps boosted by ongoing Bank of England (BoE) rate rise bets and hopes that the UK government will bring in measures to support UK households with surging bills.
Turning to today, the latest UK consumer credit data could affect GBP. Recently, consumers have been taking on more debt to tackle the rising cost of living. If this trend has continued, Sterling could stumble.
Euro (EUR) Firms on Rumours of 75-bp Rate Hike
The Euro (EUR) strengthened on Friday amid reports that some European Central Bank (ECB) policymakers may push for a 75-bp interest rate rise at the bank’s next policy meeting.
Following a report from Reuters, government bond yields in Germany, France and Italy hit two-month highs. Subsequently, the single currency also surged higher.
Germany’s flash inflation rate today could prompt further ECB rate rise bets today, if it confirms that inflationary pressures continue to build. EUR investors may see the German reading as an early indication of the Eurozone CPI, due later in the week.
US Dollar (USD) Volatile on Powell’s Speech
The US Dollar (USD) experienced some turbulence on Friday, slumping before surging higher and posting gains against most of its peers.
The volatility came amid mixed data releases and a hawkish-yet-cautious speech from Federal Reserve Chair Jerome Powell. Powell indicated that the Fed’s pace of tightening could slow but also signalled that there was still a long way to go before the US bank stops raising interest rates.
Two speeches from Fed officials could impact the ‘Greenback’ later this afternoon. If the policymakers continue the recent hawkish rhetoric, USD could climb.
Canadian Dollar (CAD) Slips as Oil Softens
The Canadian Dollar (CAD) fell on Friday as a dip in oil prices pressured the crude-linked currency.
Amid today’s lack of data, movements in the oil market could continue to drive CAD exchange rates.
Australian Dollar (AUD) Wavers as Risk Appetite Shifts
The Australian Dollar (AUD) wavered overnight as a shifting market mood impacted the risk-sensitive ‘Aussie’.
New Zealand Dollar (NZD) Mixed amid Wavering Market Mood
Likewise, the New Zealand Dollar (NZD) wobbled in overnight trade as the changing sentiment among investors caused some volatility.