Pound (GBP) Firms amid Upbeat Sentiment
The Pound (GBP) moved higher against many of its peers yesterday, recouping some of last week’s losses, as an upbeat mood lent support to the increasingly risk-sensitive currency.
However, mixed feelings about rising interest rates kept Sterling in a narrow range. Although the prospect of another hike from the Bank of England (BoE) is underpinning the Pound, the risks of a recession are rising.
This morning, August’s final services PMI could impact Sterling. A confirmed contraction in UK service-sector activity could dent GBP, while an upward revision to the preliminary score may potentially lend the Pound some support.
Euro (EUR) Undermined by Falling Investor Confidence
The Euro (EUR) found some initial support yesterday thanks to its negative correlation to a weakening US Dollar (USD).
However, a decline in Eurozone investor confidence put a firm lid on EUR. The latest index from Sentix showed that investor morale declined more than forecast in September.
Amid a flurry of European Central Bank (ECB) speakers and mid-tier Eurozone data releases today, the focus may be the bloc’s latest producer price index. PPI – a measure of wholesale inflation – is forecast to have fallen for the seventh consecutive month in July, which could dent ECB bets and weigh on the Euro.
US Dollar (USD) Softens amid Improving Mood
The risk-on market sentiment put pressure on the safe-haven US Dollar yesterday, seeing it stumble through the first part of the session.
USD’s movement was limited, however, amid thin trading conditions on the US Labor Day federal holiday.
Looking ahead, markets expect to see a 2.5% slump in US factory orders in July, which could hurt USD. Weak data could add to signs of a slowing American economy, which may increase speculation that the Fed is nearing the end of its tightening cycle.
Canadian Dollar (CAD) Wobbles amid Oil Volatility
The Canadian Dollar (CAD) struggled yesterday as a lack of economic data and volatile oil prices left the crude-linked ‘Loonie’ without much support.
Canadian data remains in short supply today. As a result, oil prices could continue to drive CAD exchange rates.
Australian Dollar (AUD) Tumbles as RBA Leaves Rates Unchanged
The Australian Dollar (AUD) slumped last night after the Reserve Bank of Australia (RBA) left interest rates on hold, as expected, indicating that the bank’s tightening cycle may be over.
New Zealand Dollar (NZD) Falls in Tandem with AUD
The New Zealand Dollar (NZD) also fell sharply last night as the ‘Kiwi’ traded true to its positive relationship with the ‘Aussie’.