Pound Volatility Returns as BoE Intervenes in Bond Markets

Pound (GBP) Crisis Continues as BoE Tries to Stabilise Markets

The Pound (GBP) faced renewed volatility yesterday, slumping around 1.5% against many of its peers before clawing its way back.

The erratic movement came as the Bank of England (BoE) staged an emergency intervention in financial markets in an attempt to restore stability. While the BoE’s plan to purchase government gilts helped stem the sell-off in the bond market, it emphasised just how close the UK is to a financial crisis.

Looking ahead, BoE policymaker Dave Ramsden is due to speak at lunchtime today. He may seek to soothe markets, but will his comments have any impact?

Euro (EUR) Undermined by Russia Worries

The Euro (EUR) was mixed yesterday. Weakness in the US Dollar (USD) helped buoy the Euro, due to the currencies’ negative correlation. However, Russia-Ukraine worries pressured EUR.

Following the ‘sham referenda’ on parts of Ukraine joining Russia, markets feared escalating economic warfare between Brussels and Moscow. These fears undermined the single currency, seeing it slip against its stronger peers.

Turning to today, the Eurozone’s latest economic sentiment index is forecast to drop for the seventh consecutive month. Will this weigh on the Euro?

US Dollar (USD) Slides as Risk Appetite Returns

The US Dollar tumbled yesterday as a bullish market mood dampened the appeal of the safe-haven currency.

In addition, a sharp drop in US Treasury yields also dented the ‘Greenback’.

This afternoon brings the final US GDP growth rate reading for the second quarter of this year. If the score is revised higher or lower, USD may firm or fall, respectively.

Canadian Dollar (CAD) Slips in Tandem with Bond Yields

The oil-linked Canadian Dollar (CAD) fell against many of its peers yesterday, despite an uptick in crude prices, as a sharp drop in Canadian government bond yields pressured the ‘Loonie’.

Coming up we have Canada’s latest GDP data, which economists expect to show contractions in July and August. If the data prints true to forecasts, CAD could slip.

Australian Dollar (AUD) Dented by Commodities Pullback

The Australian Dollar (AUD) lost ground overnight as a downbeat mood and falling commodities prices weighed on the risk- and resource-linked ‘Aussie’.

New Zealand Dollar (NZD) Softens amid Bearish Mood

The New Zealand Dollar (NZD) also weakened in overnight trade as a souring market sentiment saw investors shun the riskier ‘Kiwi’.

Samuel Birnie

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