US Dollar (USD) Stumbles as Fed Bets Recede
The US Dollar (USD) declined during yesterday’s session, as more Federal Reserve policymakers echoed their colleagues’ recent comments indicating that interest rates may have peaked.
As the session progressed, an improving market mood added to the pressure on the safe-haven ‘Greenback’.
Looking forward, this afternoon brings the latest US retail sales data. Could a slowdown in sales in September dent USD?
Pound (GBP) Mixed as Markets Await Key Data
The Pound (GBP) started the week trading without a clear direction as investors awaited high-impact wage and inflation data later in the week.
Hawkish comments from Bank of England (BoE) Chief Economist Huw Pill seemed to underpin the Pound, with Pill indicating that interest rates could rise higher. However, Sterling’s upside potential was limited.
This morning, the latest pay data showed that wage growth slowed in the three months to August after July’s figure was upwardly revised to a new record high. Analysts believe today’s data is unlikely to prompt another rate hike from the BoE, thereby disappointing GBP investors.
Euro (EUR) Uncertain despite USD Weakness
The Euro (EUR) also faced mixed movement on Monday as an improving market mood and a weakening US Dollar pulled the currency in two directions.
While EUR enjoyed its negative correlation with USD, a slight increase in risk appetite saw the safer single currency falter against its riskier peers.
Turning to today, Germany’s latest ZEW economic sentiment index could dent EUR. While the headline score is set to improve, the current assessment of Germany’s economic situation is expected to hit a fresh three-year low.
Canadian Dollar (CAD) Softens as Oil and USD Fall
The Canadian Dollar (CAD) was weaker yesterday, as the currency’s positive correlation with USD and oil – both of which dipped – dented the ‘Loonie’.
This afternoon, Canada’s consumer price index is in focus. Could stubborn inflation bolster bets on another Bank of Canada (BoC) rate increase?
Australian Dollar (AUD) Climbs as RBA Minutes Revive Rate Hike Bets
The Australian Dollar (AUD) firmed last night after the Reserve Bank of Australia’s (RBA) latest meeting minutes revealed that policymakers saw inflation as a ‘serious concern’, indicating that another rate hike remains on the cards.
New Zealand Dollar (NZD) Slips as Inflation Misses Forecasts
The New Zealand Dollar (NZD) fell sharply overnight in response to cooler-than-forecast inflation data, which dented Reserve Bank of New Zealand (RBNZ) rate expectations.