Pound (GBP) Recoups Losses after Overnight Sell-Off
After facing selling pressure overnight, the Pound (GBP) managed to edge higher through Monday’s trade, with Sterling seemingly having entered oversold conditions. However, GBP remained close to last week’s lows.
The confirmation of Liz Truss as the winner of the Conservative leadership contest – and as the new UK Prime Minister – had little effect on the Pound. Markets seem to be waiting to hear how Truss plans to tackle the UK energy crisis.
With no notable UK data due out today, GBP investors may remain focused on domestic politics. Will the new PM reveal more details about her plans to rejuvenate the UK’s ailing economy?
Euro (EUR) Muted as Markets React to Gas Stoppage
The Euro (EUR) was subdued yesterday, wavering sideways overall, as markets reacted to Friday’s news that Gazprom had indefinitely shut down the Nord Stream 1 pipeline.
Gas prices surged in response, initially pushing the Euro lower. However, EUR managed to recoup these losses as the initial knee-jerk reaction faded. Nevertheless, the single currency remained muted.
This morning, EU gas prices are pulling back, giving the Euro a lift. Can the single currency sustain these gains or will energy prices surge again?
US Dollar (USD) Touches New Two-Decade Highs
The safe-haven US Dollar (USD) hit fresh 20-year highs early on Monday morning as fears of a Eurozone recession spoked global markets.
However, the ‘Greenback’ pared these gains as the session unfolded. Market sentiment recovered somewhat, although the mood remained downbeat overall, while movement was limited by the Labor Day federal holiday.
Today, the US ISM services PMI could cause significant movement. A strong result would likely increase expectations for another 75-bp interest rate rise from the Federal Reserve, thereby boosting USD. A weaker score could have the opposite effect.
Canadian Dollar (CAD) Rangebound despite Rising Oil Prices
The oil-linked Canadian Dollar (CAD) wobbled sideways against most of its peers on Monday, despite an uptick in crude prices. CAD investors may have been hesitant ahead of the Bank of Canada’s (BoC) interest rate decision tomorrow.
With CAD investors awaiting tomorrow’s BoC decision, the ‘Loonie’ may be muted once again.
Australian Dollar (AUD) Slumps following RBA Decision
The Australian Dollar (AUD) tumbled last night following the Reserve Bank of Australia’s (RBA) interest rate decision. Although the RBA hiked rates by 0.5%, markets now expect the bank to slow its pace of tightening.
New Zealand Dollar (NZD) Falls on AUD Correlation
The New Zealand Dollar (NZD) also slid in overnight trade as the ‘Kiwi’ traded true to its positive correlation with the ‘Aussie’.