Euro (EUR) Struggles Despite Upbeat Data
Despite upbeat inflation and GDP data, the Euro (EUR) struggled to attract support after an initial spike on Monday.
While headline inflation fell to 5.3% and the economy expanded by 0.3% in Q2, core inflation held at 5.5%. As such, this led to doubts that the European Central Bank (ECB) would continue to hike rates despite the resilience shown.
Later this morning, EUR could gain ground if Eurozone unemployment holds as forecast, as it may indicate room for further ECB hikes.
Pound (GBP) Directionless amid Lack of Data
The Pound (GBP) traded listlessly yesterday as a short supply of data led investors to consider the UK’s economic health.
Bets on additional tightening from the Bank of England (BoE) served to cushion Sterling. However, it poses a double-edged sword, and may prompt further weakness in the UK’s already anaemic economy.
Owing to a light data calendar, Sterling may struggle for clear direction during today’s session. Could a bullish mood lift GBP?
US Dollar (USD) Stumbles amid Cheery Trade
Monday’s cheery mood weighed heavily on the safe-haven US Dollar (USD), prompting it to weaken against most peers.
Impactful economic data was thin on the ground for USD as well, preventing it from making much of a recovery.
This afternoon, the latest ISM manufacturing PMI is scheduled for release. Factory sector growth is expected to have contracted again, but a modest improvement could yield small gains.
Canadian Dollar (CAD) Supported by Oil Price Recovery
A recovery in oil prices supported the crude-linked Canadian Dollar (CAD) during yesterday’s session, leading it to appreciate against most of its peers.
Meanwhile Canada’s latest manufacturing PMI is expected to report a contraction in the factory sector deepened last month, potentially leading the ‘Loonie’ to relinquish some of these gains.
Australian Dollar (AUD) Crashes as RBA Holds Rates
The Australian Dollar (AUD) cratered overnight, as the Reserve Bank of Australia (RBA) defied expectations by leaving interest rates on hold.
New Zealand Dollar (NZD) Undermined by Chinese Manufacturing Contraction
The New Zealand Dollar (NZD) also faced headwinds overnight as market sentiment soured following a disappointing Chinese manufacturing PMI.