Pound (GBP) Slides following Credit Outlook Downgrade
The Pound (GBP) took a tumble yesterday as markets responded to the latest downgrading of the UK’s credit outlook. Fitch revised the UK’s credit rating outlook from stable to negative, following in the footsteps of rival agency Standard & Poor’s.
The news added to ongoing concerns about the UK’s financial stability in the wake of the government’s calamitous ‘mini-budget’. Worries about unmanageable government debt and soaring interest rates continued to weigh on the Pound, seeing it decline against the majority of its peers.
Today, Sterling’s headwinds could continue. House prices seem to have peaked and UK recruitment is slowing, indicating a downturn in the UK economy.
Euro (EUR) Rises amid ECB Meeting Minutes
The Euro (EUR) firmed against many of its peers yesterday, despite a mixed tone from the European Central Bank’s (ECB) meeting minutes.
While ECB policymakers hinted at further rate rises to come, some officials expressed concern over the Eurozone’s economic outlook and the capacity for it to absorb higher interest rates. Overall, however, EUR investors seemed to judge the meeting accounts as hawkish enough to boost rate rise bets.
Earlier this morning, German industrial production and retail sales both contracted more than forecast, which could weigh on EUR.
US Dollar (USD) Climbs in Risk-Negative Trade
The US Dollar (USD) strengthened yesterday, with the safe-haven currency growing increasingly attractive amid a deterioration of risk appetite.
The ‘Greenback’ shrugged off downbeat employment data later in the session, as Federal Reserve officials reiterated their commitment to raising interest rates. In fact, the jump in US jobless claims may have worried global markets, thereby boosting USD’s safe-haven flows.
Turning to today, the latest non-farm payrolls figure is in focus. Economists expect another robust reading, which would likely boost USD. But considering recent signs of a cooling labour market, could the report print below forecasts?
Canadian Dollar (CAD) Wavers amid Oil Volatility
The Canadian Dollar (CAD) fluctuated yesterday, trading without a clear direction overall, as volatility in the oil market affected the crude-linked ‘Loonie’.
Looking ahead, Canada’s upcoming employment data may support CAD exchange rates. Economists expect employment to have risen in September, even as more Canadians entered the workforce.
Australian Dollar (AUD) Wobbles following RBA Stability Review
The Australian Dollar (AUD) wavered in a narrow range overnight. The Reserve Bank of Australia’s (RBA) financial stability review highlighted rising risks but said that Australian households and banks are generally resilient.
New Zealand Dollar (NZD) Slips as Risk Aversion Persists
The New Zealand Dollar (NZD) declined during last night’s trade as a downbeat market mood weighed on the risk-sensitive ‘Kiwi’.