US Dollar (USD) Falls as Further Rate Hikes in Question
The US Dollar (USD) faced mixed movement yesterday, ahead of the Federal Reserve’s interest rate decision. Although, a risk-off mood helped the safe ‘Greenback’ rise against its riskier peers.
In the evening, the Fed delivered its expected 25bps hike. However, the bank’s Chair Jerome Powell was coy over whether they would hike rates again in September, triggering a sharp downside in USD.
Coming up, the second-quarter GDP growth rate for the US is due out this afternoon. Could a sharper-than-forecast slowdown in the American economy weigh on USD?
Pound (GBP) Finds Support despite Absence of Data
The Pound (GBP) moved higher during yesterday’s session, despite a lack of UK economic data.
The upside seemed to come amid renewed Bank of England (BoE) interest rate rise bets. Although analysts expect a 25bps hike next week, the BoE may keep hiking for longer than some of its global counterparts.
Turning to today’s session, UK data remains in short supply. As a result, the Pound could struggle to find a clear direction.
Euro (EUR) Subdued Ahead of ECB Decision
The Euro’s (EUR) movement was muted yesterday as EUR investors held back from readjusting their positions ahead of the European Central Bank (ECB) interest rate decision today.
While a 25bps move is broadly priced in, analysts are unsure what tone the bank will strike when talking about its policy outlook. This uncertainty subdued the single currency yesterday.
Looking ahead, the ECB decision is in the spotlight today. If there is any indication that today’s rate rise could be the ECB’s last, the single currency could slump.
Canadian Dollar (CAD) Falls amid Oil Volatility
The crude-linked Canadian Dollar (CAD) dropped yesterday as oil prices slipped, and the ‘Loonie’ was unable to recoup its losses despite a rebound in crude.
Canadian economic data is absent from the calendar today. As a result, CAD’s correlations with oil and USD could determine movement in the ‘Loonie’.
Australian Dollar (AUD) Climbs amid Post-Fed Optimism
The Australian Dollar (AUD) strengthened overnight, thanks to a risk-on mood inspired by the Fed’s rate decision. Signs that the US central bank may be near the end of its tightening cycle cheered global markets.
New Zealand Dollar (NZD) Jumps as Risk Appetite Improves
Likewise, the New Zealand Dollar (NZD) leapt higher last night as the bullish tone in markets buoyed the risk-sensitive ‘Kiwi’.