US Dollar (USD) Gains Ground amid Souring Mood
The US Dollar (USD) caught some bids yesterday amid market risk aversion, although hesitancy ahead of the Federal Reserve’s meeting minutes and a weaker factory orders print kept USD in check.
The Fed minutes revealed little new information, with a moderately hawkish tone providing the ‘Greenback’ with some support.
Among a handful of US data releases today, the ISM services PMI could be the most impactful. Could an uptick in service sector activity boost the ‘Greenback’?
Pound (GBP) Underpinned by BoE Bets
The Pound (GBP) found some success against its weaker peers yesterday amid rising expectations that the Bank of England (BoE) will deliver another bumper 50bps rate hike at its August meeting.
However, fears of a ‘hard landing’ severely limited GBP’s upside potential. Economists expect higher interest rates to push the UK into a recession later this year.
With UK data still absent today, risk appetite could drive GBP exchange rates. If the mood remains downbeat, Sterling could struggle.
Euro (EUR) Undermined by Downbeat Data
A gloomy market mood initially helped the Euro (EUR) rise against its riskier rivals during yesterday’s session.
The single currency struggled to sustain its upside, however, following a weak services PMI and a contraction in producer price inflation. These downbeat economic releases pressured EUR as the session progressed.
This morning, German factory orders smashed forecasts, giving the Euro a boost. Later on, could a modest recovery in Eurozone retail sales provide EUR with support?
Canadian Dollar (CAD) Slides amid Dovish BoC Bets
The Canadian Dollar (CAD) suffered a sharp selloff at the start of yesterday’s European session, with expectations of a more dovish Bank of Canada (BoC) weighing on the ‘Loonie’.
Looking ahead, Canada’s latest Ivey PMI is set to decline for a third consecutive month. Such a result could put further pressure on CAD exchange rates.
Australian Dollar (AUD) Boosted by Strong Trade Data
The Australian Dollar (AUD) was volatile in overnight trade, but eventually zigzagged higher, as better-than-forecast trade data lent the ‘Aussie’ support.
New Zealand Dollar (NZD) Enjoys AUD Correlation
The New Zealand Dollar (NZD) also rallied towards the end of the overnight session, with the ‘Kiwi’ lifted by its close correlation with the ‘Aussie’ Dollar.