US Dollar (USD) Rallies on Core PCE Uptick
Yesterday, the US Dollar (USD) strengthened against most major peers as an increase in the core PCE price index was confirmed.
The Federal Reserve’s preferred gauge of inflation rose to 4.2% in July, leading to renewed bets on further interest rate hikes. This was further supported by a surprise drop in initial jobless claims, suggesting lingering strength in the labour market.
This afternoon, August’s non-farm payrolls data is scheduled for publication. The number of jobs created on a monthly basis is expected to have fallen, which could weaken the ‘Greenback’.
Pound (GBP) Stumbles amid Vague BoE Guidance
Yesterday, the Pound (GBP) sank following an ambiguous speech from Bank of England (BoE) Chief Economist Huw Pill.
While Pill reasserted the BoE’s determination to cut inflation, his speech ran both hawkish and dovish. The lack of clarity weighed on Sterling, as investors sought clearer opportunities.
Today, data releases are in short supply for Sterling. As such, GBP may trade in tandem with wider market dynamics. Could bullish trade boost the Pound?
Euro (EUR) Weakens as Core CPI Cools
The Euro (EUR) weakened yesterday following news that core inflation in the Eurozone had continued to cool.
While headline inflation came in above forecasts, the mixed data further muddied the waters for the European Central Bank (ECB). The results neither confirmed nor dismissed a further interest rate hike, instead shifting attention to the bloc’s worsening economic health.
Owing to a light data calendar, the Euro could trade on its negative correlation to the US Dollar today. If upcoming American jobs data dents USD, EUR may enjoy strong tailwinds.
Canadian Dollar (CAD) Strengthens amid Oil Price Rally
Due to rallying oil prices, the commodity-linked Canadian Dollar (CAD) soared during yesterday’s session.
Second-quarter GDP data is scheduled for release later, which could weigh on the ‘Loonie’ if the Canadian economy slowed as forecast.
Australian Dollar (AUD) Bogged Down by Sombre Market Mood
Amid a cautious market mood, the risk-sensitive Australian Dollar (AUD) struggled to attract support overnight.
New Zealand Dollar (NZD) Supported by Surprise Chinese PMI Expansion
The New Zealand Dollar (NZD) wavered higher overnight due to a surprise expansion in the Chinese manufacturing index.