Pound (GBP) Recovers as Bond Markets Stabilise
The Pound (GBP) roared higher yesterday, recouping its post-budget losses against its weaker peers, as the Bank of England’s (BoE) intervention soothed investors.
On Wednesday, the BoE announced plans to buy long-dated government bonds to stabilise markets. On Thursday, the intervention seemed to have had the desired effect, prompting a rally in Sterling.
The UK’s latest GDP figures could see the Pound extend these gains today. After data published earlier this morning saw UK economic growth revised up from –0.1% to 0.2% in the second quarter.
Euro (EUR) Strengthens as German CPI Beats Forecasts
The Euro (EUR) also enjoyed a strong session yesterday, as a hotter-than-anticipated CPI from Germany boosted expectations of more hawkish action from the European Central Bank (ECB).
According to preliminary readings, German inflation jumped from 7.9% in August to 10% in September, above forecasts of 9.4%.
This raised expectations for today’s flash inflation rate from the Eurozone. If the Eurozone CPI also exceeds expectations, the single currency could climb amid increased ECB rate rise bets.
US Dollar (USD) Subdued Despite Cautious Mood
The US Dollar (USD) ticked lower on Thursday, with the safe-haven currency unable to find support despite a prevailing risk-off mood.
This downturn in USD may can be attributed to confirmation the US slipped into a technical recession. The final printing of second quarter GDP figures indicated a second-consecutive quarter of contraction.
A rise in the PCE price index, the Federal Reserve preferred method of inflation, could push USD higher this afternoon if the data prints as forecast.
Canadian Dollar (CAD) Undermined by Falling Oil Prices
The Canadian Dollar (CAD) nosedived on Thursday as oil prices tumbled after a day of volatility.
The commodity-tied ‘Loonie’ will likely be affected by further fluctuations in the price of oil today.
Australian Dollar (AUD) Muted as Chinese Data Disappoints
The Australian Dollar (AUD) struggled to find momentum during Thursday’s overnight session. A worst-than-expected contraction in China’s manufacturing sector according to the Caixin PMI, limiting the appeal of the ‘Aussie’.
New Zealand Dollar (NZD) Flat in Risk-Off Trade
The New Zealand Dollar (NZD) also traded in a narrow range during today’s Asian session, as a cautious mood limited market risk appetite.