Pound (GBP) Firms following UK GDP Report
The Pound (GBP) strengthened against some of its peers yesterday after the UK’s latest GDP report beat expectations. The British economy grew by 0.5% in October, versus the forecast 0.4%, recovering after the 0.6% contraction in September.
However, a downbeat mood and gloomy comments from Chancellor Jeremy Hunt capped Sterling’s upside. Hunt warned of a ‘tough road ahead’, with the UK economy likely in recession.
The Pound has slipped this morning in the wake of a mixed jobs report. Markets largely dismissed another rise in wage growth, which may prompt more interest rate hikes from the Bank of England (BoE). Instead, investors focused on the fall in real pay and worrying signs of rising unemployment.
Euro (EUR) Buoyed by Risk-Off Trade
The Euro (EUR) found some success yesterday as a downbeat market mood lifted the safer single currency against many of its riskier peers.
An initial decline in the US Dollar (USD) also helped the Euro, due to the currencies’ negative correlation. However, a late recovery in USD trimmed EUR’s gains.
Later this morning, markets expect Germany’s ZEW economic sentiment index for December to show another sharp improvement. Could this boost the common currency?
US Dollar (USD) See-Saws as US Treasury Yields Fluctuate
The start of yesterday’s session saw the US Dollar slip amid thin trading conditions and a decline in US Treasury yields.
A recovery in US yields helped lift the ‘Greenback’ in the afternoon, although an improving market mood limited the safe-haven currency’s gains.
Turning to today, USD may be muted ahead of the latest American inflation rate reading. Both headline and core inflation are forecast to have eased last month, which could dent the US Dollar by dampening Federal Reserve rate hike bets.
Canadian Dollar (CAD) Muted despite Stronger Oil Prices
The crude-linked Canadian Dollar (CAD) was mixed yesterday. While an uptick in oil prices supported the ‘Loonie’, a drop in Canadian government bond yields offset the upside.
With no notable Canadian data due out today, movements in the oil and bond markets may continue driving CAD.
Australian Dollar (AUD) Buoyed as Consumer Confidence Improves
The Australian Dollar (AUD) moved upwards overnight as a mostly upbeat market mood and positive consumer confidence figures supported the ‘Aussie’.
New Zealand Dollar (NZD) Ticks Higher amid Cautious Optimism
The risk-sensitive New Zealand Dollar (NZD) also found some success overnight, edging higher amid a modest risk-on sentiment.