Pound (GBP) Firms as BoE Bets Continue
The Pound (GBP) gained ground yesterday as ongoing Bank of England (BoE) rate hike bets continued to lift the UK currency.
A cheery market mood also supported the increasingly risk-sensitive Pound, allowing it to climb against its safer peers.
Turning to today, an ongoing lack of UK data could see Sterling trade without a clear direction. If the market mood remains upbeat, GBP could stay afloat.
Euro (EUR) Fluctuates following Softer CPI
Softer-than-expected Eurozone inflation data dented the Euro (EUR) yesterday, causing markets to adjust expectations for more European Central Bank (ECB) interest rate rises.
However, hawkish comments from ECB President Christine Lagarde helped to offset the downside. The Euro also found support from upbeat employment data and a weaker US Dollar (USD).
With no Eurozone data being published today, EUR’s negative correlation with USD could drive movement in the currency amid high-impact US data due out in the afternoon.
US Dollar (USD) Slides as Fed Bets Recede
A pullback in Federal Reserve rate hike bets dented the US Dollar yesterday. Recent comments from two policymakers advocating a pause this month weighed on the currency.
The safe-haven ‘Greenback’ also suffered dwindling demand due to an improving market mood. Relief that the US debt ceiling deal passed a Congressional vote saw investors opt for riskier assets.
Looking ahead, this afternoon’s US employment data is in the spotlight. If the non-farm payrolls figures exceed forecasts, fresh bets on a Fed rate rise this month could help USD rally.
Canadian Dollar (CAD) Rebounds as Oil Prices Rise
The Canadian Dollar (CAD) initially faced selling pressure yesterday due to a surprise contraction in Canadian manufacturing activity and the currency’s positive correlation with USD.
CAD was able to rebound in the afternoon, however, after a rise in oil prices lifted the commodity-linked ‘Loonie’.
Australian Dollar (AUD) Climbs amid Improving Market Mood
The Australian Dollar (AUD) rallied during overnight trade amid a risk-on mood. News that the US debt ceiling deal passed the Senate, averting an economic catastrophe, cheered markets.
New Zealand Dollar (NZD) Strengthens in Risk-Positive Trade
The risk-sensitive New Zealand Dollar (NZD) also climbed last night, with the ‘Kiwi’ enjoying renewed demand amid the bullish tone among investors.