Pound (GBP) Skyrockets as Government Abandons Tax Cuts
The Pound (GBP) surged higher yesterday as the new Chancellor of the Exchequer, Jeremy Hunt, reversed almost all of the unfunded tax cuts unveiled in the ruinous mini-budget just three weeks ago.
The huge policy U-turn helped restore stability to markets, with stocks, bonds, and Sterling all rallying in response.
Without any UK data due out today, domestic political news and its impact on markets could drive GBP exchange rates.
Euro (EUR) Wavers amid Ongoing Russia-Ukraine Worries
The Euro (EUR) slipped early on in Monday’s session as Russian rocket and drone attacks continued to hit Ukrainian cities. As the conflict escalates, EUR investors are growing increasingly anxious.
However, the single currency was able to regain some ground as the day progressed, seemingly supported by a drop in the US Dollar (USD), with which the Euro is negatively correlated.
Looking ahead, forecasters expect Germany’s ZEW economic sentiment index to drop to a record low later this morning. Such a fall in morale could weigh heavily on the Euro.
US Dollar (USD) Slips as Global Markets Rally
The US Dollar declined yesterday as a bullish theme in markets saw traders ditch the safe-haven currency in search of higher-yielding assets.
The upbeat mood came as global investors cheered the British government’s mini-budget U-turn, with fears of a financial crisis in the UK abating.
Turning to today, USD traders may take their cues from the latest American industrial production report. Will a modest recovery in manufacturing growth give the ‘Greenback’ a boost?
Canadian Dollar (CAD) Declines amid Oil Volatility
The crude-linked Canadian Dollar (CAD) fell against many of its peers yesterday as fluctuations in oil prices unsettled CAD investors.
With Canadian economic data still thin on the ground today, oil price dynamics could continue to influence the ‘Loonie’.
Australian Dollar (AUD) Firms following RBA Minutes
The Australian Dollar (AUD) ticked higher in overnight trade as the Reserve Bank of Australia’s (RBA) meeting minutes signalled more interest rate rises to come. In addition, a cheery market mood supported the risk-sensitive ‘Aussie’.
New Zealand Dollar (NZD) Rises as Inflation Exceeds Forecasts
The New Zealand Dollar (NZD) also strengthened overnight as hotter-than-forecast inflation figures excited NZD bulls.
Quarter on quarter, inflation in New Zealand increased from 1.7% in Q2 to 2.2% in Q3, rather than easing to 1.6% as markets had expected. This reading raises expectations for more interest rate hikes from the Reserve Bank of New Zealand (RBNZ).