US Dollar (USD) Weakens amid Fed Pause Speculation
The US Dollar (USD) stumbled through yesterday’s session as expectations of a policy pause from the Federal Reserve weighed on USD demand.
In the afternoon, US jobless claims unexpectedly jumped by their largest amount since October 2022. This added to the pressure on the ‘Greenback’.
Amid a lack of US data today, dovish Fed bets could continue to undermine USD. Risk appetite may also influence the safe-haven currency.
Pound (GBP) Rises amid BoE Hike Bets
The Pound (GBP) gained ground yesterday, the UK currency being lifted by bets on further Bank of England (BoE) interest rate rises.
Recent predictions that the UK economic outlook is better than expected and that inflation will remain high have seen markets price in multiple further hikes from the BoE.
Today, BoE bets could continue to underpin the Pound. A lack of UK data may limit movement, however.
Euro (EUR) Mixed despite Eurozone Recession
The Euro (EUR) came under initial pressure yesterday after the Eurozone’s latest GDP data showed that the bloc slipped into a recession at the start of this year.
However, EUR’s negative correlation with the US Dollar kept the single currency afloat against its weaker peers and limited losses elsewhere.
Coming up, European Central Bank (ECB) Vice-President Luis de Guindos is speaking this morning. Could hawkish hints help lift the Euro?
Canadian Dollar (CAD) Sheds Post-BoC Gains
The Canadian Dollar (CAD) fell yesterday, shedding the gains it made after the Bank of Canada’s (BoC) shock rate rise. Weakening oil prices dented the commodity-linked ‘Loonie’, as did the currency’s positive correlation with a weakening US Dollar.
Canada’s latest labour market report is in focus today. An uptick in unemployment could see CAD fall further.
Australian Dollar (AUD) Stumbles following Chinese Inflation
The risk-sensitive Australian Dollar (AUD) ticked lower overnight after Chinese inflation missed forecasts, raising concerns about the health of the world’s second-largest economy. However, AUD bounced back this morning amid an improving market mood.
New Zealand Dollar (NZD) Edges Lower, Rebounds in European Trade
Likewise, the New Zealand Dollar (NZD) softened last night but has since regained some ground as risk appetite returns to markets.