Euro (EUR) Tumbles on ECB Dovish Hike
The Euro (EUR) slumped yesterday after the European Central Bank’s (ECB) interest rate decision disappointed EUR investors.
Although the ECB hiked rates by 75 basis points, it made no mention of quantitative tightening (unlike its global counterparts). This, along with slightly more dovish rhetoric, saw markets scale back bets for further aggressive rate rises.
Today brings three potentially impactful Eurozone data releases, including German GDP and inflation. If the data raises economic concerns, EUR could slip. However, if inflation exceeds forecasts, ECB rate rise bets could be back on.
Pound (GBP) Wobbles as Rally Loses Steam
The Pound (GBP) was mixed yesterday as the recent rally inspired by Rishi Sunak’s appointment as Prime Minister started to fade.
Criticism of Sunak’s decision to reinstate Suella Braverman as Home Secretary, despite concerns about her breaching the ministerial code, may have worried GBP investors. Nevertheless, the stability brought about by Sunak’s appointment provided GBP with some support.
In the absence of UK economic data today, domestic issues could continue to drive Sterling. Will the UK’s gloomy outlook see GBP further trim its gains?
US Dollar (USD) Mixed as Markets Digest GDP Data
The US Dollar (USD) gained ground yesterday as an uptick in US Treasury yields and a muted market mood saw the safe-haven currency snap its two-day losing streak.
However, a return of risk-on trade in the afternoon put pressure on USD. In addition, mixed US data dented the Dollar. Although GDP growth recovered, inflation eased sharply, which dampened Federal Reserve rate rise bets.
Among a raft of data, the US core PCE price index is in focus today. This is the Fed’s preferred measure of inflation, so a hot reading could further prompt expectations of aggressive action from the US central bank.
Canadian Dollar (CAD) Marches Higher in Tandem with Oil
The Canadian Dollar (CAD) recovered from recent lows yesterday as a steady uptick in oil prices boosted the crude-linked currency.
Looking ahead, Canada’s latest GDP data could impact the ‘Loonie’. Economists expect Canadian growth to have ground to a halt in August and contracted in September, which could hurt CAD.
Australian Dollar (AUD) Slips as Sentiment Sours
The Australian Dollar (AUD) headed lower in overnight trade as a downbeat market mood dented the risk-sensitive ‘Aussie’.
New Zealand Dollar (NZD) Dragged Down by Risk-Off Trade
The New Zealand Dollar (NZD) initially spiked overnight before turning south as risk aversion crept into markets.