Pound (GBP) Rebounds amid BoE Rumours
The Pound (GBP) managed to recover a good portion of Tuesday night’s losses yesterday amid rumours that the Bank of England (BoE) may be willing to extend its emergency bond-buying scheme beyond Friday, although the BoE has denied this.
News that Liz Truss will cap revenues for renewable and nuclear energy companies may also have supported Sterling. The move – which Truss denies is a windfall tax – will help to plug the £60bn gap in government spending. However, an unexpected 0.3% contraction in UK GDP in August capped the Pound’s recovery.
Turning to today, the UK’s financial stability will likely remain in focus. Any news from the BoE or movements in bond markets could cause more GBP volatility.
Euro (EUR) Undermined by Russia-Ukraine Worries
The Euro (EUR) softened yesterday, despite Eurozone industrial production expanding more than forecast in August.
The downside came as Russia continues to escalate its attacks on Ukraine. Additionally, concerns grew over the future of the Zaporizhzhia nuclear power plant, which has suffered two power outages in the last six days.
With no notable Eurozone data due out for the remainder of the day, Russia-Ukraine news could continue driving EUR exchange rates.
US Dollar (USD) Mixed amid Strong PPI and FOMC Minutes
The safe-haven US Dollar (USD) ticked higher against many of its peers yesterday, with a risk-off mood and higher-than-forecast PPI print supporting the currency.
However, movement was somewhat muted ahead of the Federal Open Market Committee (FOMC) meeting minutes. The minutes hinted at the possibility of a slower pace of monetary tightening from the Fed, which saw USD soften a little in the evening.
Looking ahead, the latest US inflation figures are in focus. Economists foresee another rise in core inflation, which may convince the Fed to maintain the pace of its interest rate hikes. If so, USD could climb.
Canadian Dollar (CAD) Fluctuates alongside Oil Prices
The commodity-linked Canadian Dollar (CAD) initially wavered higher yesterday amid an uptick in crude prices but pared its gains in the afternoon as oil began to slip.
Today, a lack of Canadian economic data could leave CAD to trade on oil price dynamics.
Australian Dollar (AUD) Rangebound amid Tepid Risk Appetite
The risk-sensitive Australian Dollar (AUD) traded sideways overnight amid a subdued market mood.
New Zealand Dollar (NZD) Flat amid Lack of Data
Likewise, the New Zealand Dollar (NZD) was fairly flat in overnight trade as thin trading conditions kept the ‘Kiwi’ in a narrow range.