US Dollar (USD) Surges amid US Economic Resilience
The US Dollar (USD) rallied yesterday afternoon after a surprisingly strong US services PMI boosted the ‘Greenback’.
In August, American service sector activity unexpectedly accelerated, expanding at its fastest pace in six months. This strong data raised expectations of more interest rate hikes from the Federal Reserve.
Turning to today, an expected uptick in US jobless claims could take the wind out of USD’s sails. Signs of a loosening labour market may dent Fed bets.
Pound (GBP) Slumps as UK Anxiety Grows
The Pound (GBP) fell sharply yesterday amid fresh warnings about the UK’s bleak economic outlook. Forecasters expect two years of anaemic economic growth as high interest rates hit households and businesses.
Comments from Bank of England (BoE) Governor Andrew Bailey added to GBP’s weakness. Bailey said the bank is ‘much nearer now to the top of the cycle’, which dampened BoE rate hike bets.
Amid the ongoing lack of UK data, concerns about the British economy could continue to impact GBP today.
Euro (EUR) Falls amid Downbeat Data
The Euro (EUR) softened yesterday, with the currency facing pressures early on following a reported 11.7% contraction in German factory orders in July.
Shrinking Eurozone retail sales added to EUR’s woes, while the Euro was also hit by its negative correlation with a rising US Dollar.
This morning, a larger-than-forecast contraction in German industrial production has put fresh pressure on EUR. The common currency could struggle again today.
Canadian Dollar (CAD) Fluctuates amid Choppy Oil
The crude-linked Canadian Dollar (CAD) wavered yesterday, in tandem with oil prices. Meanwhile, the Bank of Canada (BoC) acted as expected, keeping interest rates unchanged, which kept CAD in a tight range.
Later this afternoon, the August Ivey PMI is set to report another month of contracting business activity. This could dent CAD.
Australian Dollar (AUD) Rebounds on Hawkish RBA Comments
The Australian Dollar (AUD) initially weakened overnight amid disappointing trade data and a risk-off mood. However, hawkish comments from the Reserve Bank of Australia’s (RBA) outgoing Governor, Philip Lowe, saw AUD bounce back.
New Zealand Dollar (NZD) Buoyed by AUD Correlation
The New Zealand Dollar (NZD) traded in tandem with the ‘Aussie’ last night, softening at first before recovering strongly in the early hours of this morning.