Pound (GBP) Weaker as Markets Pare BoE Bets
The Pound (GBP) ended last week’s session on a sour note, as markets readjusted their expectations for more Bank of England (BoE) interest rate hikes.
Following gloomy economic news and dovish comments from BoE Governor Andrew Bailey, economists now expect to see just one final 25bps hike from the British central bank.
This morning, BoE Chief Economist Huw Pill is due to speak. If he fuels speculation that the bank is almost done raising rates, Sterling could stumble.
Euro (EUR) Dented by ECB Speculation
The Euro (EUR) suffered a similar fate to the Pound on Friday, with the single currency struggling to attract support as markets scaled back bets on another rate hike from the European Central Bank (ECB).
Markets are pricing in the possibility that the ECB may have already completed its hiking cycle, with the bank broadly expected to leave rates unchanged at this week’s meeting.
Turning to today, Eurozone economic data is thin on the ground. As a result, the Euro may trade without a clear direction.
US Dollar (USD) Holds Near Highs amid Souring Mood
The US Dollar (USD) faced headwinds at the start of Friday’s session, with a drop in US Treasury yields pulling the ‘Greenback’ lower.
However, the safe-haven currency found its footing again amid a souring market mood, recovering to end the week holding near a six-month high.
The only US data release today is August’s consumer inflation expectations, which are expected to have eased. Could this dent USD?
Canadian Dollar (CAD) Jumps following Upbeat Employment Report
The Canadian Dollar (CAD) leapt on Friday following strong jobs data. The Canadian unemployment rate held at 5.5% in August, rather than rising as expected, while wage growth unexpectedly accelerated. The data boosted bets on another rate hike from the Bank of Canada (BoC).
Looking ahead, there’s a lack of Canadian data today. Therefore, oil prices could drive the crude-linked ‘Loonie’.
Australian Dollar (AUD) Rises as Chinese Deflation Fears Ease
The Australian Dollar (AUD) rallied overnight amid easing fears of deflation in China following the country’s consumer price index over the weekend. As the ‘Aussie’ often trades as a proxy currency for the Chinese economy, signs of economic growth in the country boosted AUD.
New Zealand Dollar (NZD) Climbs on Positive China News
The New Zealand Dollar (NZD) also marched higher last night, with the positive economic news from China boosting the risk-sensitive ‘Kiwi’.