Pound (GBP) Drops as UK Sales Contract
Pound Sterling (GBP) sank during Friday’s session after UK retail sales contracted far more than forecast in August.
Sales declined by 1.6% last month, rather than the expected 0.5% fall, indicating that the UK economy could already be in recession. This also dampened Bank of England (BoE) interest rate rise bets, adding to the pressure on Sterling.
There’s no UK data due out today, so the Pound may trade on domestic factors. Now that the period of national mourning is over, GBP may be lifted by a return to activity.
Euro (EUR) Buoyed by ECB Rate Rise Bets
The Euro (EUR) gained ground against most of its peers on Friday as the Eurozone’s final inflation rate reading confirmed last month’s rise, thereby solidifying European Central Bank (ECB) rate rise bets.
Additionally, news that Germany has seized stakes in three oil refineries controlled by Russian company Rosneft may have helped allay fears about the Eurozone energy crisis.
Later this evening, ECB President Christine Lagarde is due to speak. Any hawkish or dovish comments could boost or dent the Euro, respectively.
US Dollar (USD) Rises amid Risk Aversion
The US Dollar (USD) strengthened on Friday, with the safe-haven ‘Greenback’ supported by a risk-off mood.
USD trimmed its gains later in the session, however, after US consumer sentiment missed forecasts.
With notable US data thin on the ground today, risk appetite could drive the US Dollar.
Canadian Dollar (CAD) Retreats as Oil Wavers
The Canadian Dollar (CAD) softened on Friday as instability in the oil market dampened the appeal of the crude-linked ‘Loonie’.
Turning to today’s session, Canada’s inflation rate reading for August could impact CAD. Easing inflation could see markets scale back expectations for Bank of Canada (BoC) interest rate rises, which could dent the Canadian Dollar.
Australian Dollar (AUD) Undermined by RBA Minutes
The Australian Dollar (AUD) edged lower overnight, despite a bullish market mood, after the Reserve Bank of Australia (RBA) meeting minutes hinted at a slower pace of policy tightening in the future.
New Zealand Dollar (NZD) Falls alongside AUD
The New Zealand Dollar (NZD) also declined last night, with the ‘Kiwi’ trading true to its positive correlation with the ‘Aussie’ Dollar.